EXTENDING THE FIRST TIME HOME BUYER TAX CREDIT NOW? . . . . . . WHAT'S THE RUSH?

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EXTENDING THE FIRST TIME HOME BUYER TAX CREDIT NOW? . . . . . . WHAT'S THE RUSH?

WHEN WAS THE LAST TIME YOU SAW A POLITICIAN WITH THEIR MOUTH SHUT?

They just cannot keep their mouths shut about anything.

IF YOU WANT TO KILL A REAL ESTATE MARKET TODAY. . . . PROMISE A BETTER DEAL FOR NEXT YEAR!

Why not let it expire, get the data next tax season and see how many first time buyers got the credit and how much it cost.

All this announcement will do is keep many on the fence longer waiting for prices to come down.

I'm totally against renewing, resuscitating, extending, etc. the tax credit. Any time the government favors one class of citizens, i.e., first time home buyers, against others, the rest of the country and our progeny gets the bill.

Further, all it will do, in terms of the real estate business, is keep many on the fence longer. We've got folks on the fence now waiting for prices to "bottom". Now they can sit on the fence waiting for a "better deal" in home prices AND a better deal in a tax credit.

Witch's Brew

THE FIRST TIME HOME BUYER'S CREDIT IS A WITCH'S BREW!

Who is it bringing into the market?

1. Prospective home buyers looking for a deal?
2. Prospective home buyers not ready to buy?
3. Prospective home buyers who don't qualify?
4. Prospective home buyers locked in leases?
5. Prospective home buyers looking for $$$ but not real estate.
6. All of the above.

AMERICANS HEAR WHAT THEY WANT TO HEAR.

One of our home buyer clients withdrew an offer on a new condo yesterday because he believes that they will be able to get a better deal next year. . . BETTER PRICE and a HIGHER TAX CREDIT.

GEEZ! WHY WAS HE IN THE MARKET TODAY?? FOR THE TAX CREDIT. He and his wife are in a lease that extends to next June 30. The promise of the $8,000 tax credit next year encouraged to get into the market today. HOWEVER, I don't believe they were ever really ready to buy. They were short of cash and needed a seller credit to help pay closing costs, yet they continued making low offers, thereby losing offers to more serious home buyers. The agent working with this couple keeps trying but simply can't get the buyers to understand that, in the location where they're buying, Arlington County is A SELLER'S MARKT.

HERE'S THE BOTTOM LINE.

Home buyers who . . . . .

want to buy a home,
need to buy a home,
want and need to buy a home.. . . . . WILL BUY A HOME.

They will not need a tax credit for incentive. They will have been saving for the cost of acquisition. They will NOT be looking for a government hand-out to help them with the cost of buying a home.

FAR TOO MANY SO CALLED HOME BUYERS TODAY SIMPLY WANT TO MOVE. They are not prepared for home ownership.

THE REAL ESTATE BUSINESS NEEDS SERIOUS HOME BUYERS, not opportunistic home SHOPPERS.

_______________________________________________________________________________________________________

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Posted by Lenn Harley, Real Estate Broker, Virginia & Maryland on 09/17/2009 05:02 AM

Comments (37)

First Time Homebuyer Tax Credit in the Mortgage / Finance Channel

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37 Comments on EXTENDING THE FIRST TIME HOME BUYER TAX CREDIT NOW? . . . . . . WHAT'S THE RUSH?

SEP

2009

To me this is simply a band-aid being placed on a bigger problem...

Time will tell

your friend in Charlottesville Virginia!

Lenn I have been saying this same thing for a while. Leave the gov't out of this and the RE market will fix itself. People will buy when they need to that is what is the free market. Whether they are buying food or clothes or a place to live these basics will continue to be bought and sold if the free market were allowed to do what it does. I am personally not in favor of extending the tax credit for the reasons you have pointed out. This is not a popular stand amoungst some of my fellow agents. If it is extended, I wonder if it may become just another gov't program that we can't live without, that costs us tons of money, eventually going broke and still doesn't work well. Just my two cents worth. Thanks for asking. :-)

Great points - I really don't believe the tax credit will be extended, but I've heard from many who think it will, and will be a bit surprised next year!

Charles. Thanks. Agreed. This, as with most first time buyer programs, only helps a few and alieanates far more.

Nannette. Indeed. I spend half my working hours looking for money to help home buyer. I must do this in order to compete. Buyers believe that buying a home should be as easy as just moving.

Lenn - I totally agree with allowing the tax credit to run out !! I believe the government is just setting the stage for what people in this day and age are already convincing themselves of " If I buy something I want something in return ". The government is yet again placing a band aid over a wound that requires stitches. The problem : Band aids are short term fixes for a deep wound. They only stop the bleeding temporarily ! This program is not helping the future American, not my children or grandchildren.

Homes prices are still declining. There are some 5 more million foreclosures about to hit our market. Not including those facing pre-foreclure. I fear home buyers are buying unrealistically right now. They are buying solely because they are receiving in return. This is a bad combination because they are taking no pride in their home ownership.

I stand my ground when I say owning a home is a privelage !

Penny. And buyers who are not serious home buyers are just going to wait. Longer and longer. Sadly, they'll be running real estate agents around like crazy.

Not me. I spend a lot of time analyzing the needs and motivation of buyers before I commit my time. All things considered, I'd rather go fishing.

Melissa. Absolutely! I hate government programs that favor some over others and then send the bill to our children.

The tax credit will run out...no one on the hill thinks it's a long term answer to our housing crisis. It really only benefits a select few.

Thanks for your post. It's nice to hear someone standing firm for their beliefs, while supporting it with clear thinking.

Lenn- Like the way you think! Totally agree. Also the value of something that goes on and on will lose its value. Even if worthwhile. All things should/will come to an end. We have had many "buyers" lookers that really are lured into the market because of the credit, but do not have a handle on what they can afford. When pre-approved at a certain amount, the homes in that range just do not live up to their concept of what they had in mind. NAR had sent out a blast email asking for Realtors to support extending the bill. But bet that is another post! Dixie

Lenn - I'm often in agreement with you, but I'm inclined to think the tax credit needs to be extended -- precisely because it - not anything else government has done - has saved 2009 in terms of the RE market.

And the possibility of a new wave of foreclosures and an increase in interest rates factor heavily into my support of an extension (with a well-timed phase out). (No November would be a good time.)

All the political signs suggest there will be an extension.

But should there be an increase in the amount or an expansion of the eligibility? No. (The political signs don't seem to favor that anyway.)

And no, I'm not sure a case can be made for the idea that the credit has allowed "unqualified" buyers to qualify. Nor are buyers motivated by this credit any more likely to be looking for a deal than all the rest in this market.

Please remember: much of the country is not in the relative good shape that yours is. (I know you know that but not every reader might.)

Lenn, I wrote my post on the exact subject this morning, not as elegant to be sure. I get so tired, as you say with politicians extending programs when a new program could bring others into the market.
Make it a great day my friend,
Paul

Paul. You couldn't have said it better.

Cathy. The tax credit promise gave favors only to some. I'm looking for relief for all of those UPSIDE DOWN HOME OWNERS. They are 20% of our economy.

Dick and Dixie. I'm not commenting on what we get from the NAR. There aren't enough (**^$$^*() on my keyboard.

The NAR still recommends that First Time Home Buyers consider hiring a buyer's agent AFTER selecting a lender and mortgage.

Jim H. The prospective buyers keeping our agents running around are opportunistic and not serious buyers. Folks who want and need to buy will.

Lenn, you bring up some excellent points with this post. Currently, I see some buyers scrambling to try to get in under the deadline, but many of them are going to waste some money as they will never qualify.

Lenn:

I agree the talk of ANY EXTENSION is keeping people on the fence. LET THE TAX CREDIT EXPIRE. The market will correct itself.

Lenn,

Loving the counterpoint to the endless dreams and demands that Congress extend, augment, and increase the credit, basically because agents want the business.

I don't think taxpayers owe a dime to keep my personal business afloat. And, I'm sad to see agents slaving every day, often to help folks compromise their LT finances. When you have to pull out the sofa cushions and count pennies for them to buy something, anything, the risk is so great for those who often can least afford it. But that's OK as long as the agent gets a payday?

Lenn...

Excellent ...you summed this up very nicely! I like working with real home buyers and NOT "opportunistic shoppers!"

Lenn... excellent.. I think this is one of your better blogs in a while, because it was to the point, short, and was easy to read & understand. Overall, I think it's an excellent point, to hold off and collect real data... and yes, so many of us hear what we want to hear, which is what I said in my last post. That so many realtors are saying that this help tons of buyers... I would ask them, you know this for a fact? They would reply, yes, because the buyer told me so. So are you telling me, more people bought this year, just because of the tax credit, and not because they already had plans to buy? I just think many realtors wanted to hear what they wanted to hear, or didn't dig further...just my opinion. But I agree with what you stated and it was a great job of getting several points across.

jeff belonger

I agree that the time has come to pull the plug and check the stats to see what this credit really did. Quite frankly I don't think the credit did as much as everyone believes as far as saving the 2009 market. There were plenty of other buyers out taking advantage of lower prices who DIDN'T qualify for the credit.

Lenn... PS... some of the rush is because in several of the comments on other blogs about this topic, realtors are saying that lenders are taking to long to underwrite and or close the file. And many buyers will lose their tax credit. We are still closing them in 25 to 30 days... I just picked up a client that was suppose to close in August, after the apllication was taken in June. I spoke to another one that it took the lender 2 1/2 months to tell them that they couldn't help them with the mortgage... this is all way too sad.

Jeff Belonger

Cindy. That is my experience too. They've run our agents around like crazy.

Jeff. I don't believe that first time home buyers should be a favored class. What about the Move Up buyers who are now trapped in a home with negative equity?

Richard. BINGO!

Mike. How many of them were serious buyers?

Bob. Sooner or later, we'll learn.

Gabe. Agreed. On the fence buyers are not serious buyers.

If they did it now, it would eliminate any sense of urgency that might be out there. They never extended the DC homebuyer credits until a few months after they expired, then made it retroactive. Not that it makes that much difference here because of the income cap.

Lynn, well said. I have had TWO clients in the past 30 days tell me they were going to stop shopping for a home until the government decides whether or not to extend the tax credit. Both have heard and firmly believe that they will extend the credit, expand it to cover EVERYONE (not just first-time homebuyers), and increase it to $15,000. I am so fed up with the government talking about something they MIGHT do. I'm with you....keep your mouths shut until you actually decide something, because all they're doing is stalling the market now.

Personally, I think a lot of this could be cleared up if they would come down on these banks that were given bailout money, yet refused to let it circulate. The REAL crisis is in the banks right now....not the buyers.

Thank you, Lenn! You have written about another reason for my discomfort with extending this tax credit in your usual articulate way.

Cheers,

Robin

Lenn,

To me a "serious buyer" is one who has prepped, saved, studied the market, and has made a conscious decision to move into home-ownership from a position of strength.

Serious buyers do not have to be "created," nor does their urgency have to be "created." But the folks in DC are paralyzing many of them with the prospect of an incentive on the horizon.

Some of the serious buyers are even 1st timers.

And then there are the frenzied ones who see "$8000" and go for it pell mell, like people who hate cheese but push and shove to get the free cheese....

Great job with this Lenn!

You hit the nail on the head with the line:

THE REAL ESTATE BUSINESS NEEDS SERIOUS HOME BUYERS, not opportunistic home SHOPPERS.

I still say ...whats the rush? Is it a real difference? Will they actually see it? I have an FHA buyer dying to buy but they can't find what they're looking for right now...they are hoping to find something in time for the credit...I told them to concentrate on the purchase first and then worry about the credit..they'll probably extend it anyway.

Lenn - very clearly stated. I am against extending the credit, I feel that it is only stealing from the future, not just our children's future, but, from the market's future. Although, there is still one group that I would like to extend the credit for, and that is those people serving in the military and stationed overseas, especially in Iraq and Afghanistan, during the program eligibility period.

Mike. I'll certainly agree with the benefits any, old, existing or new for our military, serving anywhere.

Neal. I wouldn't risk saying that but my experience with the buyers in the market for the credit is that they are not serious buyers and want a lot more.

Craig. Thanks. I'm serious about it.

Mike J. We've seen a lot of these buyers. They're serious about the tax credit, but not about making a buying decision.

Robin. Thanks. I mean every word of it.

Lina. You're right. The government doesn't know our market. Most of our serious home owners are so upside down they are out of the market anyway. We have NO move up market.

Pat. You've got it right.

Lenn... I agree, what about those that have no equity, that aren't first time homebuyers. Then let's do this.... let's give everyone $20,000 to do what they want to do with it... if it gets them from out and under, to buy a new home, okay. But wait... why do they want to get away from that house? In most cases, they still would have to buy another one. Is it just because they are under water, yet they have no trouble paying for their mortgage? I would bet that there are many cases such as this, yet they want help, a bail out. Tom Burris just told me of a story to where the seller wanted to do a short sale, stopped making payments, yet was denied, because he had the incomes and assets to make the payments.. when will it stop?

You made this statement to Mike J. "We've seen a lot of these buyers. They're serious about the tax credit, but not about making a buying decision." I think this statement is right on target...

And I loved Richard Weisser's comment... comment # 16... "I like working with real home buyers and NOT "opportunistic shoppers!"

You have some good food for thought and a good conversation. I just wrote about this and posted it on facebook... I had one realtor read me the riot act per se... lol Hey, I love opinions... but do we really think them out at times? I don't think so... thanks

jeff belonger

Amen! I commented on a post here from someone who was wanting people to contact their congressmen and senators to ask them to extend the program and I think I was the only voice of decent. I totally agree that no class of people should benefit on the backs of others hard work and sweat of others.

I was appauled by the "cash for clunkers" program. Three years ago this month I traded in my 7 year old mini van (I had three teenagers at the time) and got a Toyota Highlander Hybrid upping my gas milage by 10 mpg and what did I get... nada, zilch, zero, not even a thank you. I'm tired of feeling I'm being punished for not being "needy", and I'm tired of my children and yet unborn grandchildren being strapped with a burden they are never going to be able to repay.

So I again repeat myself to the thought behind this post. AMEN! It's about time someone said it and I'm happy to see most of the commentors are agreeing with you. I know I did contact my congressman and Senators and give them my 2 cents (let the dang thing expire)

Tammy. Welcome to the world of the dissenters. There are a few of us. State what you believe and you have my respect even if I disagree. In this case, I agree.

I am just plain sick and tired of the word "program".

Jeff. This market has driven me crazy. I work day and night looking for money for buyers. I do have priorities.

VA buyers come first.

Buyers with immediate need (relocating) come next.

Buyers with good credit come next.

Buyers with good credit and down payment come next.

The list goes on but the buyer who has earned our services gets priority.

I'm glad I read Jeff's post, which led me here, Lenn. I've seen the requests to extend the FTHBTC and while I initially thought it might be good, something inside me said wait...and now I have my answer why. How many of us actually understand the dynamics that this tax credit has created? It seems rather epheremal to me. We all know that the tax credit will not last forever, so why should we have pinned all of our hopes of reviving the housing market on its passage in the first place?

William. What I determined yesterday when I heard serious talk about extending the tax credit was that it was not necessarily good for our business.

Yesterday when our buyer withdrew the offer when he heard the news, our agent calculated that he had spent approx. 40 hours previewing and showing that buyer.

I know that so many of the many home buyer contacts I get want to know about down payment, tax credit, program, program, etc. BEFORE they even figure out what they want to buy?

The first time home buyer tax credit has been a nice boost to my personal business. I've helped several families move into home ownership this year that were at least in part, spurred to action by the credit. In my experience it has served it's purpose.

Having said that, I think we've had enough bail outs and "programs" for now. The talk of expanding the credit to all homeowners and increasing the credit to $15,000 sounds great until you answer this question.

WHO"S GONNA PAY FOR IT?

I've only had one client want the tax credit. The rest of my market is foreclosures and second homes. I don't think it should be extended at all.

I hear a lot of sentiment here for having the government stay out of the housing market. But then it was the government's policies that spurred the overheated boom.

However, this credit is not helping unqualified people buy. (NAR and FANNY wanted to make it so but didn't succeed.) It is providing an incentive for qualified people to buy now.

And this credit is not wasting the time of buyer's agents. The credit is not forcing any agent to spend time on a buyer that is not willing to get themselves truly pre-approved.

If the government has no business interferring in the housing market, maybe we should just end the deduction for mortgage interest. Just to be consistent. And do away with Fanny and Freddie. We could all then survive on the tiny silver of the real estate market that would still be functioning.

I hope Congress extends the credit soon. The tax credit effectively ends in my market in about two weeks -- after that getting closed by November 30 is highly questionable.

Jim. I suspect that you'll get your wish.

BTW, the mortgage interest deduction is available to every home owner. It's not taking from one and giving to another. That's my biggest objection. The government picking and choosing citizens for favors.

Amy. We have a lot of folks coming into the market for the tax credit, but they don't all buy.

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Lenn Harley, Real Estate Broker, Virginia & Maryland

Leesburg, VA

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Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate

Address: Lovettsville, Fairfax, Arlington, Alexandria, Stafford, Woodbridge, King George, Fredericksburg, Leesburg in VA., Rockville, Laurel, Columbia, Baltimore, Waldorf, Frederick, Eastern Shore, Bowie, Harford, Annapolis in MD. , Maryland, Virginia

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Maryland and Virginia real estate agents and brokers serving buyers and sellers with experience. Search listings in Maryland and Northern Virginia and get daily updates of new homes for sale by e-mail. Contact Lenn for a tour of homes. REALTORS available every day for home tours. Homefinders network of experienced agents and brokers includes new home specialists, resale specialists and luxury home experts. We can help you with your home buying needs. Homefinders offers discounted 5% listings for Maryland, Northern Virginia home owners. Experienced agents helping buyers and sellers in the Washington Metro area since 1985.

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