Homebuyer Tax Credit Likely To Be Phased Out
There are those who say the First Time Home Buyer’s Tax Credit has artificially boosted the market, that some in D.C. are afraid to pull the plug for fear of what may happen– an even softer market. Even more somber news: it appears that the the federal government is now securitizing 95% of U.S. home mortgages.
I’m torn. I think the credit was necessary, and not only do I think it should be extended, I think it should be expanded. Goldman Sachs, otherwise known as Government Sachs, has said it pushed up home prices by 5%. There are simply too many people who bought adjustable rate mortgages in the past few years, too many people who, if they have to sell their homes, will have to carry cash to closing. What if they don’t have it? I’ve heard that many banks are shelving some bad loans, others making deals as low as 2% interest rates just to keep folks in the home, the property off the courthouse steps.
Almost makes you want to stop paying your mortgage. But then, who said life was fair?
The housing market is a vital component of our economy, and when people move and buy homes, they tend to spend money — movers, hardware, paint, soft goods, hard goods.
As for the government propping up an industry, I have this to say: Amtrack.
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Or “Amtrak”
And yes, I think they should extend the credit. Isn’t all stimulus spending improving something that would be worse without the spending? I don’t understand the argument that this is artificially raising the housing market…where would the banking industry be without the bailout? I think it can be reasonably assumed that it would be A LOT worse off without it…
Calculated Risk blog reporting it is a done deal…
Everyone making their living off the residental housing industry we need to take action now. http://www.fixhousingfirst.com let them know what you are thinking!!
Giving out free money to people is no way to fix the market – the fact is there are too many homes out there, too many people in debt, and too many people trying to “make a living” off of people buying too much house and going into debt.
This type of short-sightedness is what makes people roll their eyes at Realtors and Mortgage Brokers/Lenders.
If the tax credit has boosted values 5%, all that means is they will drop at least that much when the stimulus is gone. Nothing has been solved, we’ve just kicked the can down the road a little farther. In the end it comes down to fundamentals – not made up salesperson “fun-damentals”…real, honest to goodness facts.
Are you kidding me, the “tax credit” was absolutely ridiculous. The National Association of Realtors estimates that about 1.8 to 2.0 million first-time buyers will take advantage of the $8,000 tax credit this year, with approximately 350,000 additional sales that would not have taken place without the credit.You can calculate the new $15 billion projection; 1.9 million times $8,000. But this only resulted in 350,000 additional sales. Divide $15 billion by 350 thousand, and the program cost is about $43,000 per additional buyer. Very expensive.