There have been several recent posts about the $8,000 housing tax credit. Some have explained the finite points of it, some have just made mention of its existence, some have rallied behind it, and some have dismissed it as having little impact. I fall into the last group.
(1) If the government really wants to stimulate housing sales in a huge way - even to the point of getting people to enter the market who haven't even thought that much about changing their residence, there are much more aggressive ways to do it that what has been approved.
(2) If someone is really looking for another home and intends to find one, the $8,000 isn't going to cause them to make a decision. They already are predisposed to it. The "incentive" is just a rebate that in part compensates them for their decision.
(3) If the $7,500 or $8,000 provisions did not exist, I doubt we would have seen see any appreciable decrease in sales activity than what has been the case.
(4) The government really should save our money (and it really is our money) from this program - they're going to need it for something else.
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I agree that unfortunately it probably will not help us much. It is a shame that they could not figure this out.
True, if someone is going to buy, they will buy. It is just a facade that may get some off the fence - hopefully.
It was an attempt to add interest to the smoke and mirrors. Fortunately, it is working for some.
Michael,
I'm not sure if this was just a case of wishful thinking or just not looking at how it might work (or not work). :)
Steve
Gary,
I agree. If you and I were sitting down to write an offer you started having second thoughts - and I reminded you of the $8.000 - you night go ahead, but that would not be what got you to that point. :)
Steve
Mel,
If nothing else, it looks like something has been done - and that might be enough to begin restoring some consumer confidence - that seems to be our biggest hurdle. :)
Steve
Steve,
Really well written, and I agree with you completely.
I do think the real estate market is in trouble as I don't think we are near a bottom yet. Because of this perception of mine I think we do need a housing stimulus, but this first time home buyer tax credit is not it.
I don't see it persuading somebody to do something that they weren't going to do, which is what we are going to need in order to stop home values from declining.
Home sales are going to be very consistent with or without this credit and this means it will be a waste of money.
Mark,
I have a little different take on it. I think the main thing that is lacking is buyer condifence. We still need to see prices fall in some markets. That shouldn't keep people on the sidelines but it is. If the government really wanted to help, they'd spend their money on a massive PR campaign that let people know it was OK to go back into the market. :)
Steve
Steve:
My Take... No sale here - the incentive is flawed if the goal is to stimulate home sales. I would rather see the money used to recapitalize the PMI industry or to allow FannieMae to loosen its restrictive guidelines on condo sales. Either of these two items would help the new home sales markets. This incentive is a failure and will not achieve its goals as written.
Competing Government Policies... The government works in mysterious ways - on one hand it is offering $8,000 and on the other hand it is requiring larger downpayments to insure that the loans originated can be sold to Fannie and Freddie. At the same time, it is encouraging and impeding sales with two different and competing governmental policies.
Good Idea - Fox Guarding Hen House... Finally, Missouri has a deadline looming to place new restrictions on mortgage brokers. It is my understanding (without any research) that Missouri mortgage brokers will be placed under the supervision of HUD if Missouri fails to act. As an aside, this is another unfunded federal mandate imposed on the states. However, the implication is important because HUD and its goal of minority homeownership and affordable housing contributed to the subprime mess which, in my opinion, is being blamed on mortgage broker practices and not on systemic flaws.
Ryan,
Thanks for agreeing with my premise and then for going into great detail about your other concerns. :)
Steve
Yes, I do like to pontificate and hijack your posts. For whatever reason, your posts generally get my blood flowing. It isn't you; it is the misguided policies adopted in Washington DC that your posts highlight. Maybe they should adopt the mantra "Do No Harm" or better "Don't Do Anything" because they are making this mess worse, not better. Just wait when this tax bill becomes due and saddles future generations with unmanageable and unserviceable debt. It will pale in comparison to a single mortgage default and the quick fix won't be to print more money or write more checks like the current bailout/stimulus/spending plans.
Ryan,
I support a "Don't Do Anything" agenda for the Congress. Let them adjourn for the rest of their term. :)
Steve