Comments on: Where Do We Stand? Extended Buyer’s Tax Credit- Politics

By: Paula Henry

Paula Henry — Fri, 13 Nov 2009 15:15:53 +0000

Retract I did post one article about the $8000. tax credit. Just wanted to correct the error.

By: Fred Glick

Fred Glick — Fri, 13 Nov 2009 14:24:32 +0000

OK, here’s my 7 cents (due to inflations, 2 cents has been increased).

If you saw my CNBC interview last week (still available at http://fredglick.com ), you would see that I called for the repeal of the credit and to take that money and earmark it for jobs.

Well, after a bit more thought, 9 more cups of coffee (no, not at one time), a little discussion and putting on my diplomacy coat, I have come up with a compromise.

How about leaving the credit as is but changing it ever so slightly:

1. Monotize it so the buyer gets the money help as direct down payment.
2. Make them pay it back, with 6% interest over 10 years.
3. Use the recycled principal and interest to help fund the new health care bill.

Now, what did we just do?

Kept the status quo of the number of buyers who would have taken the credit anyway, brought the money back to coffers (a la TARP), lowers inflation (less dollars out there) and help reduce the tax burden we may have felt and made people better so they could get jobs and buy homes!

It is government assisted capitalism at it’s best!

Call your Senators, Representative and the White House today and let them know Fred Glick sent you.

By: Dan Connolly

Dan Connolly — Tue, 10 Nov 2009 02:31:23 +0000

The thing that kills me is that everyone moans and groans about what this will do to our grandchildren yet we spend as much in ONE month in Iraq (10 billion/month in Iraq alone) as we do on the entire homebuyer tax credit. And we have been doing that for some seven years. It’s a tax cut people! Since when do conservatives complain about tax cuts? A lot of the buyers don’t get money back, they just don’t owe as much! It’s good for the real estate business and I am happy it has been extended.

I still believe that the so called “cost” of the tax credit is inflated political spin. I would like to see some real numbers on that, from an unbiased source (as if there is one). What did they spend the money on? advertising? Bribing the politicians to vote for it (or against it)?

By: Ken Montville

Ken Montville — Tue, 10 Nov 2009 01:31:12 +0000

I agree that the credit is a stimulus. Buyers that were in the market, even if only in their minds, got busy and bought a house which stalled the free fall in housing prices. The market was “stimulated”. Now, whether it needed to continue through the normally slow Winter months is another question.

As to the expansion to existing home owners, I write on my personal blog that many of the existing buyers that may want to take advantage of it probably won’t because they can’t sell their existing home without a home sale contingency on the other end. The income limits are pretty robust but the purchase price cap is a respectable $800,000 which is only slightly above the FHA limit in my area. I think it really depends on your geography as to whether this is outrageous or simply a nice perk.

I totally agree that the credit really just entices buyers that might be buying anyway to buy. That’s why it’s called a stimulus. Will it come back to bite us? I’m not so sure. Lending guidelines are so damn tight nowadays that I’m pretty sure these folks are going to be ok. Will it cause interest rate or general economic inflation? Not in and of itself. There’s plenty of other money being pumped into the system that will cause that but my guess is that State and Local governments will do plenty of taxing come 2011 and keep inflation down. After all, they won’t have the transfer and recordation fees from real estate to keep themselves afloat.

By: Joe Spake

Joe Spake — Mon, 09 Nov 2009 22:40:51 +0000

I do not favor the credits. Most of the houses I sold in the last 6 months were to buyers taking advantage of the credit. I have talked to most of them in the last couple of weeks, and they said they would have bought anyway. The $8000 was a nice Easter egg. (and as Jay has said many times, a very poor reason to make the decision to buy a home).
I would like to see the market find its real bottom then start back with a healthy recovery. The credits are just postponing some pain down the road.

By: Greg Cooper

Greg Cooper — Mon, 09 Nov 2009 18:47:25 +0000

Paula….you have hit upon a big unspoken issue that we won’t know for several years. How many of those who used the credit will either lose their homes through foreclosure or BK? I don’t know who or how these things get tracked but you can bet it is…and not by the Feds.

Jay…thanks for explaining it more precisely. To put some synthesis to this I agree that most would have already bought and those that needed the stimulus may well be those that will become the failures that Paula is alluding to.

By: Jay Thompson

Jay Thompson — Mon, 09 Nov 2009 18:02:36 +0000

“Why does it cost 43K per 8K tax credit? Plain English please!”

Because the vast majority of home buyers that took advantage of the tax credit would have bought a home anyway without it. Depending on whose numbers you believe, 200,000 to 355,000 people bought a home because of the tax credit. Divide that by the 10 BILLION or so it’s cost so far and you get $28K – $50K per home actually sold due to the credit.

That’s QUITE the subsidy to help the real estate market.

My kids, grandkids and great-grandkids will be paying for this.