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Let's increase the Home Buyer Tax Credit to $100,000...

And while we are at it, why don't we expand it to cover everyone. Do you think the NAR would get behind this?

Honestly, I bet that they would see that this would be ludicrous. Not that it wouldn't be GREAT for real estate agents, we would be rolling in it. But, obviously it would cost WAY too much money, and it would destroy the real estate market... Let's examine how?

It would inflate prices...
- Sellers would KNOW that people buying were getting $100k in free money. Prices would go up by nearly that amount...
- Buyers would push prices up by competing for properties.
It would SERIOUSLY impact future sales... All of the buyers for the forseeable future would be pressing to get it done NOW.
It would throw the market WAY out of whack... Buyers would suddenyl forget that the house that they paid $300,000 for really only cost them $200,000... when the time to sell comes, they would insist on getting at least $300,000... because they couldn't LOSE money, right?
Combined with the previous point... price would CRASH right after the credit stopped... ALL of the buyers would be out of the market. With no buyers, anyone forced to sell would have to discount at an amazing rate.

It would likely take years, if not decades for the effects to be worked out of the system.

So, can we agree that offering a $100,000 credit to buyers would NOT be in the best long term interests of the real estate industry, OR consumers.

Why is it that $15,000 or even $8000 is different? Is it because it doesn't matter? If it doesn't matter, then what help is it? And...

Is it inflating prices of entry level homes?

Is it impacting future sales?

Is it throwing the market out of whack?

Will it affect prices in a few months?

I'd love to hear from you...

Posted by Lane Bailey - REALTOR & Car Guy on 10/03/2009 11:40 PM

Comments (143)

Tax Credits in the Real Estate Market Channel

business of real estate, buyer, seller, financial crisis, politics

Originally posted at: Looking Out From the Garage: Let's increase the Home Buyer Tax Credit to $100,000...

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143 Comments on Let's increase the Home Buyer Tax Credit to $100,000...

OCT

2009

That would be horrible, Well, good for my business RIGHT NOW,but horrible. People come to closing and the agent is like, "this 8,000.00 credit thing is wonderful isn't it?" And I say, well, do you know where the money is coming from? Most say no... and I tell them.. "US, we are paying taxes" ALL THE SUDDEN ITS NOT SO GREAT ANYMORE....

Lane- Stopping that $8,000 tax credit is going to be like pushing away a crack pipe, not that I would know anything about it...

OCT

2009

Larry, Do you just come out to play at midnight? :)

The tax credit hasn't had that much of an impact on my market. It's there, but is more the icing on the cake and not the primary reason for buying. People are taking advantage of reduced prices and low interest rates. In order to even buy a house in our area most people make too much money to qualify for it anyway. It is helpful for some entry level people in cooperatives. But even condos are on the high side in our area.

Lane - I am hoping that this tax credit does not get extended. Yes, we will take a hit from losing some first time home buyers, but, at least it will stop borrowing from the future, both in buyers and from our children's paychecks.

I see no real long term value to the tax credit. In our area it did seem to create a feeding freenzy for lower priced properties. However for NOVA lower priced properties aren't alot to get excited about. Time to get back to reality and let the market correct itself as it has done in the past.

Not sure how many times this lesson has to be taught, but the market has to solve the issue. Government is in the way and creating a problem. The removal of the tax credit is the first real step to recovery.

Lane, Now that Cash for Clunkers is over the auto market cannot hold its own. There are many first time home buyers taking advantage of the $8,000 stimulus. The real estate market will experience another dip when this ends.

While I do not like the handout it is not as bad as the 80 20, or 80, 10, 10 mortgages or interest only mortgages we saw before. The only ray of sunshine here is that stricter qualifications have been placed on buyers and appraisals.

I'd prefer to see lower interest rates offered to home buyers with the ability to adjust later in the life of the loan based on increased earnings. That way the increase would be based on the ability of the borrower to afford the higher payment - not based on the T bill or the Libor rate.

I'm sure there are problems with this approach as well but rebound will not occur as long as inventory exceeds demand.

Tana- I work at night sometimes but Im not allowed to talk about that here. wink wink

OCT

2009

Lane, it's not just that the real estate market would be affected but everything else as well. Tax credit money has to come from somewhere, it is not free money. Essentially it's a subsidy that is paid by other taxpayers. And unless governments cut their expenses, this money will have to be made up somewhere else.

Everytime I read an Active Rain blog..I learn something!

LOVE this!! All the comments are educational, too.

$100,000 is pretty extreme. I think we are giving up some future sales. However, people are always getting married, starting a family, changing jobs etc, so there will always be a need for housing. I would like to see it either go away or extend the credit another year.

I have heard a lot about this bieng talked about at the water cooler, hair dresser, grocery line. And none of the people I have heard seem to realize where this money is coming from, they just want more of it!

While the tax credit is making first time homebuyers rush to buy their first home; my concern is that wa are paying for this incentive only to have multiple people rush out and do absolutely ridiculous things with the money. They aren't using it to improve their homes or make smart investments, many are wasting it on things that don't make any sense...

Chanda panda

While I see many of you don't like the idea of the tax credit, and appears you are working in very affluent areas where it hasn't made a difference. I work in a military market of predominantly first time home buyers who don't really have a lot of money saved up but want to invest in their future. And a tax credit is a very good thing for them. In January we had over 3 years of inventory on hand, and today we have right around 15 months. I think $8000 is a drop in the bucket compared to what it has and will cost for homes to sit on the market. Look at the number of people that are employed when they have made a purchase. It doesn't help them qualify for a home, just an incentive to invest in the economy overall. Homeowners are now able to sell in my market and able to buy in another like yours. No it doesn't need to last forever, but if it will help stimulate the buyers market why not. True, the market may feel a dip when it's over, but look how much good would have been achieved prior to that.

Lane prices have been inflated for a long long time and we as Realtors were rolling in it until the "internet" came along. Our 6% listing fees have been calculated into home sales forever.....If you want to get the consumer motivated then show that your motivated!

The same thinking goes for minimum wage. Why not crank up the minimum wage to $100/hour?

In my market the leftover REO properties are the majority of properties available for first time homebuyers. I have shown many of these homes and they all need an overhaul that will be a lot more than the $8000 tax credit. All of us, me and my clients, and have decided the tax credit does not out weigh buying the wrong house. It will cost more than $8000 in the long run to purchase the wrong house. Besides it is a bidding war for just about anything under $250,000 in our area. I say make it go away.

The whole idea behind the credit is to get two things done. Get 1st time home buyers engaged in the market which then would create a dominoe effect on the 2-3 tiers above it. Plus it doesn't hurt getting some of the REO homes off the books. Even though you may not have thought you benefited you just may have if you peel back a few layers!!

Lane, sometimes it is necessary to put things in ridiculous terms for folks to see the reality.

I posted a comment on Facebook last night about shoud it be extended or if agents were going to send emails to their Congressman like NAR suggested to extend the credit.

Interesting....

Ok, if so many of us are against the tax credit and extending/increasing it, then why is our national association, NAR, so for it? It seems most taxpayers are against it, but like so many other programs, it is with us anyway........change, are you ready for it????

We have seen very little of this stimulus money in this area. I personally think it is a waste of our money and that the market will slowly rebound on its own. In fact, we have seen a little bounce already in the past few months. Just keep those interest rates down and people will realize what a good deal they are over a period of 30 years!

Hi Lane, Those sellers who sell to a first time buyer typically go on to buy something else. I wonder what the trickle-up effect will be ?

Maybe we can execute this program along side the cash for clunkers program.

A lexus for every new driveway!!!!!

Not a huge fan of Government spending, but I'd rather see the 8K(or even better, 15K) go to a home buyer than to Wall Street or the Military budget or foreign aid or some other corporate/bureacratic handout. Our tax money pays for those things as well. With Alt-A and Option Arm defaults still to come, inventory levels will increase dramatically, lowering prices and valuations which will prolong our eventual recovery. This MAY be a way to absorb some of that. IMHO, doing nothing and letting the system clear everything out could be even more catastrophic. As this recession has been bad enough, I really would like to avoid a depression.

I really hope that it stays at $8,000 and does not get bigger. I would actually love to see it reduced and be applicaple to all primary residences. Eventually, our industry needs to have its own legs and not be dependent on a gimmick. I think making it larger would have an adverse effect on the real estate market because then consumers will hold out for more. My clients who took advantage of the $7500 repayable credit were upset when the $8000 credit was introduced, my $8000 tax credit clients will be upset if it goes to $15,000, and the rest of the consumers will have learned to wait and see what the government does next. A slightly reduced credit would cause consumers to take advantage of it before it goes away all together.

The government can't keep giving away money and we can't keep relying on a credit to hold our industry together. What are the effects 2-5 years down the road?

Whew!,

I read the headline in the email and my heart jumped up to about 4000 beats a minute. All is good now after reading the article.

I guess the same is true with other Government subsidized programs such as Social Security, Medicare, Federal Employees Insurance. If we got rid of all these, the Gov would be making money and our children would not have to worry about being over taxed (They would only have to worry about retiring and health care).

Wonderful blog. I hope it raises awareness that the tax credit is only "giving a fish to feed em for a day". I'd much rather fix the problem. How you ask?

I say stimulate and offer tax incentives for small business. Please note that over 90% of employed Americans are employed by small business. PUT THE FIRE HOSE ON SMALL BUSINESS AND HOUSE WON'T BURN TO THE GROUND. Small Business is currently retracting due to an environment of uncertainty and a bias in Washington against the "Free Market".

When jobs are created, raises are given out, expansion and growth take place then I believe you'll have a healthy environment for people to buy new homes. This is a very logical solution if you think deeply about it. Yes it's Capitalism aimed at the backbone of our country.

If you agree with me please write your Congressmen and Senators and tell them where they should be focusing.

Why are Realtors perceived as the biggest idiots on Earth? You only have to read an article like this and the comments to see how stupid they talk and act.

NAR as an organization is only in it for the fee's. Its clear from the level of training Realtors get.

In the area where I live, the average price of recently sold homes is right around $100,000, so the tax credit is "useful." The wisdom of it is lacking though. I am also wondering how many people will actually see this money credited to them and show up in their bank account after January. It may have changed, but the last I heard the local car dealerships still hadn't gotten their cash for clunkers money.

--Kim

Wow Lane. This post was moronic! Please give me back the 2 minutes I spent reading this and the other minute shaking my head at agents like you.

I am sure a real estate agent that lives in FL, CA, NV and AZ would feel differently. The tax credit not only helped first time home buyers to purchase homes, but has helped rid the thousands of foreclosures and shortsales. In our markets we have a long way to go to recovery. The banks still have not released the majority of foreclosed homes. It has already been devastating to a lot of our markets. If banks release a lot more foreclosures in these markets without some relief, we will have vacant homes on every street. This not only creates avenues for crime, but further diminishes our already fragile markets. I would like to see a 15K tax cut open to all primary home buyers, FHA 203K for investors, eliminate the 90 day waiting period before a repaired property can me sold and allow credit qualified buyers to assume mortgages with no down payment. I think this is better than modifying loans to market value, that only effects those that made bad buying decision. This opens up the market for everyone to take advantage.

Attention grabbing headline, much like you would see in the NEW YORK POST...and, like the POST it offers a very biased view. By extending your logic to a social night out wiith your friends for a beer, wouldn't you have more fun if you drank 20, maybe 30 drinks? Of course not. The same way with the housing credit...the right amount of government stimulation is unknown, but, at least in my market, the first time buyers have come onto the scene, freeing up the resellers to buy...and hence, we are busy again...Whenever a home is purchased, durables (refrigerators, lawnmowers, furniture, etc) are purchased, further goosing the economy...Since the market was unable to free itself from the banking crisis (which, of course is another story of deregulation gone wild) the government needed to step in and it did...I chuckled when I read through most of the posts so far...where were you spending hawks from 2000-2008 when 1.5Trillion $ largely in corporate tax breaks and another 1Trillion $ was mispent in a fruitless war effort (remember those patriotic flag waving events which were apparently put onto a charge card)...The fix will be painful and the less complaining that you do and the more bona fide production you can muster, the better off our country will be.

I'm sorry you got called a name by someone who doesn't understand tongue-in-cheek when they see it, but while we're at it - why don't we give renters government-subsidized rent? (Oh wait, that's already happening!)

Interesting concept, comparing an $8000 subsidy to a $100K subsidy, and doing straight line extraolition.

But-- it just doesn't work that way. To see that clearly, apply the same thinking to a subsidy on one dollar, $1. You can clearly see that such a subsidy would have zero effect on the market, either good or bad.

At $8000, or even $15000 that is being talked about, can have a positive effect, as seen by the dramatic drop in the inventory levels being reported around the country. But too much or too little, and the subsidy can have an unhealthy skewing effect on the market-- as well as the so-called Federal budget.

Lane, I see your point, but isn't it true that the impact of any tax credit should be looked at as a percentage of the sales price?

I could see it being similar to a Vitamin C pill - give a kid 1 vitamin C pill, he feels better.

Give a kid 12 vitamin C pills, now he's feeling sick.

I'm not for government bailouts, and I know where the money is coming from - I guess I would rather see the money be spent on these homebuyer tax credits, IF the gov't cuts back all of its other ridiculous spending on banks, etc.

The premise of your hypothetical situation is ridiculus. Whether you like the plan or not is this the right time to end it. Would it not make more sense to wait until spring to pull the plug. I work in a four season market and winters are tough. I would also like to see how and when the refunds start entering the economy before making a decision. Again, even if you are not for the concept, we have it and we need to end it or continue it in a responsble manner. Home sales have triple in the 140k market and that is starting the wave to higher priced homes. Let's extend it, remove the first time buyer clause but make it only for tax payers that are moving up by 30% or more in home value.

Lane, you are a genius! Reducing this sham to the ridiculous perfectly illustrates how this tax credit has stolen money from one group, to bribe another, so that originators and agents can earn commissions.

If this tax credit were reversed and only available to people who earned over $250,000 (the current limit for 'the rich'), you'd see a rebellion.

Jackie, I'm in San Diego and I completely disagree. This and the foreclosure moratoria (state and federal) have wrecked our market. There is a supply/demand imbalance that is keeping hundreds of thousands of would be homeowners on the sidelines because they know prices have farther to fall. We would be on the road to a recovering real estate market, fairly soon, had banks followed the law (and their duty to the shareholders) and foreclosed and disposed of the non-performing assets.

Just like the Hoover/FDR administration, the Bush/Obama administration thinks they can intervene in markets and avert deflation. Just like the 1930s, we'll be subject to a prolonged depression because of that intervention rather than quickly rebounding

Karen - you should become well versed in VA loans. That is about the only way anyone can get 100% financing. You will find it much more lucrative than an $8K credit over the long haul.

Manipulating any market always has future long term negative effects. Some had a few extra entry level sales - those were simply buyers coming in 1 - 5 years early and sales you will miss later. Some, like many of the buyers mentoned by Karen were not ready and never would have been ready. Those homes will be in foreclosure in a year.

NAR is making us look like pigs at the trough. It is time to stop adding debt to current and future taxpayers.

Then there are moronic comments from Aaron adding to the hype as his business needs every $395 it can find.

Give it up, let it die!

After reading some of these posts by fellow Realtors, I can honestly say I am embarrassed by some of these comments. It is a shame that so many of us only look at our own pocket books when discussing this issue. Do you know that nearly 50% of sales in the last year were attributed to first time buyers. Does this not help the seller who "needs" to move? What was the name of this tax credit "The American Investment & Recovery Act", isn't that the reason it was overwhelmingly passed by our elected officials? Or would we rather see prices so devalued that hundreds of thousands more families would be "upside down" in their homes, further hurting our neighborhoods and values and our fragile economy. The idea behind the credit was to create a stimulus and that it has indeed done.

In a "market of predominantly first time home buyers who don't really have a lot of money saved up but want to invest in their future. And a tax credit is a very good thing for them. " Karen Butler (Coldwell Banker United Realtors)Well said Karen. I see you understand the big picture!

While I do not believe that increasing the tax credit is necessary, I think we need to take a hard look at the data and the modest improvements some of our markets have seen. It will be a slow recovery, but we need to move in that direction.

@ Lane: If you were anemic would you take an iron supplement daily? Or would you swallow several bottles of iron tablets at once to try and "Cure" your ailment? You Cannot possibly think that an $8000 stimulus is the same as the preposterous $100,000 scenario you depicted. Just food for thought.

I never understood how they decided on $8,000. Wouldn't say $5,000 had the same impact while costing us taxpayers less?

I think it's high time that the market gets better on its own without throwing in a bunch of MY tax money. I am glad we have/had the $8000.00 but I'm not sure if we should extend it or not as I have very mixed feelings about it. Believe it or not there are some of us that were smart with our home purchases and financial planning while there are many that weren't.

I'm all for helping the economy & housing get better but at what cost to us now or in the future?

Yes!!!!!!!!!!!!!!!!!!!!!

And lois #22, Maine has received $505 billion already, mostly on infrastructure projects.

Look it up here

Lane,

Somebody said that agents in FL should feel different about the first time buyer credit. I am puzzled by that. Yes, it is good for Realtors, but is America just about Realtors?

What a shameful sell off. And what a shameful misguided action by NAR trying to pull the blanket of "free" money their way.

I can't believe the amount of anger with the banks, that we, Realtors, know what they shold have done and how they should have done. And here we are losing the ability to see how crooked our aspirations are.

They are no about America, they are about making money stealing from America

Just last night I was commenting on Missy Caulk's facebook page about the same. Personally I do not think we should extend the tax credit and I think your $100 K example is great. For 22 years a huge % of our business has come from 1st time buyers and they needed no incentive to buy.

Here in MI some of the areas we service have dropped to 1980 levels that's why people are buying. Last time we saw these prices rates were 12% and that to me is an incentive enough. Why should we continue giving money to people to do something they would have done anyway, especially when the country has such a huge debt.

Why does the upside down seller have to sell and watch the buyer get the tax credit?

How about increasing the tax credit to $25,000 and just giving it to people who own a home but are upside down? Wouldn't we (the U.S. Government) be helping these people "invest" in their existing homes rather than having them short-sale and giving the credit to some new owner?

O'yea, I forgot, this wouldn't help us REALTORS get our commissions. Better make it only apply to new owners so we can get our cut. Yes, it does push up the prices of homes. Yes, it does result in many existing owners to short-sale and face future deficiency judgments.

It is almost like we (the U.S. Government) are assessing deficiency judgments against former first time home buyers who have to sell, giving the money to new buyers and :) giving REALTORS, mortgage brokers, banks, etc. a big cut. YEA! GO NAR!

I am sick of watching NAR promote policies and candidates which are good for its members in the short run but bad for everyone in the long run.

This title made me laugh out loud when I read it! Ridiculous! I must say I have had my fair share of first time home buyers this year that have wanted to take advantage of the tax credit. However, the majority of them did not care about the credit if they had to "settle" for a house that did not fit their needs.

I too am in San Diego like the mortgage broker in comment 39 and agree the tax credit has caused an imbalance in our market. Now everyone is waiting for the next shoe to drop. The next round of price reductions. We need stabilization, not uncertainty.

I am thankful for all the $8000 has generated, I am happy for all the home buyers that have been able to utilize the credit, but I am ready for reality to set in and start the recovery.......

Great post! Don't you love it when the government throws money at who they want, when they want? Wish they would just stay out of our pockets all together but that's not going to happen anytime soon...

What would REALLY help is making FHA rehab loans available to investors... that REO inventory sure is ugly, and most 1st time buyers have no clue on how to do a good rehab.

lane, thanks for reducing this this the absurd...i'm glad that i am not the only one who cringed when the suggestion was made to extend AND expand the current credit. the tone here is very refreshing and encouraging...and doubly so when you consider that we all have a very one to one direct connection to this credit.

to all of you who were unable to detect the Lane's sarcasm...wow! you are the same folks who are easily misled by those who would contrive to mislead you...think Obama, or Mccain.

for those of you who did not take, or pay attention, in economics...the government does not have money. they are a conduit for that which they take from others to give to others. any credit is the purest form of welfare. no amount of spin can change this. we are tax payers, government in any form is a tax consumer.

taxes are motivators, credits are motivators...i'm unwilling to allow the same 'tards that caused this mess to continue their market meddling. i do not think they are smart enough. that goes for the NAR as well...their "economists" were the most vocal of cheerleaders as the bubble inflated. where were they as the money flooded in and hundreds of thousands of "buyers" committed financial suicide? the NAR is a failure as it is a single issue PAC in most cases.

Oh, bravo! Excellent way to make the point. My hat is off to you!

Wow, was that a GREAT article or what. Concise and to the point without fluff. Thank you very much for putting my thoughts on Active Rain. We are kidding ourselves if we think the market can be propped up artificially. Remember what caused this mess, the Government altering the guidelines for who qualifies for a mortgage. PLEASE LEAVE THE MARKET ALONE. It will come back and be very strong if left to it's own devices. Big Brother NEVER helps, only Hurts.

The tax credit has helped our market tremendously . I would like to see it extended as it has helped stimulate sales for first time home buyers without inflating prices.I don't however, what to see an increase in the amount they receive as the $8000 has done what it was set out to do, sell homes.

Lane, I have read your article with great interest. You seek to make it "obvious" that government incentives of any sort are a step backwards in this real estate market. I think you fail to mention a couple of very important things and I think these items throw your argument out of the water.

Here it is:

a) Real estate is a LEVERAGED investment by definition. That means, a $30,000 downpayment, controls an asset worth $300,000. If at the rate of inflation we then have $300,000 growing in value at 4% per year, for let's say, the next 10 years, it's alot more "interest" in the form of appreciation than had the same $30,000.00 sat in a CD account in the bank at 2.5% or even 4%. By using a smaller amount of money to control a larger financial instrument, we apply the principle of Leverage.

b) The $8,000 to $15,000 tax credit is taking into account the concept of a leveraged financial instrument. You do not understand a leveraged financial instrument and how a smaller dollar amount can be used to control a larger asset. This is one of the key reasons to BUY REAL ESTATE AS OPPOSED TO STOCKS OR BONDS. It's NOT a 1:1 ratio, between so many dollars vs so many shares. It has a MULTIPLICATION EFFECT in terms of leverage. This is the same concept being applied. You are missing the point.

c) The IRS is ALREADY involved in the real estate business for a very long time. Say you are a landlord and you buy an investment property. Do you know that you can legally write off depreciation of the physical building for 25 years, because the physical structure is DEPRECIATING, but in the market place, it is APPRECIATING. This is not some accounting trick. The IRS ALREADY allows us to write off the value of the property, less the value of the land it is standing upon, times a factor, divided by 25 years. Are you telling all the landlords out there that the tax credit should now be taken away? The real estate as a tax shelter benefit would disappear and therefore, there is no reason for people to pump capital, cash, into real estate and earn a steady return in the form of rents. There is therefore no tax shield and therefore no reason to invest in real estate as opposed to some other financial tool. In your argument, ALL government action is bad. So if that is the case, let's get rid of the tax shelter benefits of writing off mortgage interest income and let's get rid writing off property taxes and while we are in that mind set, let's get rid of DEPRECIATION write off for owning rental property. Your argument doesn't hold water. The government is ALREADY HEAVILY involved in the tax side of the real estate business, SINCE 1946.

d) GDP vs NDP. Go back to your basics economics Course 101 you took in college. Do you remember the words Gross National Domestic Product and Net National Domestic Product? That means, the entire economy generates income in the private sector. That is the Net National Domestic Product. It is everything from farm production, to textiles, wool, steel, automobiles, banking, ship yards, retail sales, whole sale, trucking, information technology, oil production, coal production, the entire GAMUT of ALL business activity of large business and small of the ENTIRE NATION OF OVER 300 MILLION PEOPLE. When the NDP is small relative to Deficit as a ratio, the government spending, (yes, deficit spending) is then used to SPUR the economy to create a multiplication effect, and this is known as GDP. GDP=NDP+Government spending. It is a way to PULL out of a RECESSION. Go back and re-read the history books on Franklin Roosevelt.

Inflation means: TOO MUCH CASH IS IN CIRCULATION, AND THE VALUE OF CASH IS NOTHING, SO the amount of cash has little buying power. SOLUTION: Print less cash relative to the value of Gold, so each piece of paper has more value. (But, we're not on the Gold Standard since Nixon). Therefore, since we are no longer on the GOLD standard since 1964, solution: RAISE INTEREST RATES, to make each piece of paper have more value and take cash in circulation out of play. Dry up the cash in circulation. This is the classic cure for INFLATION. RECESSION/DEPRESSION: Problem: NOT enough cash in circulation.

RECESSION MEANS: The exact opposite of INFLATION. Nobody is lending. Businesses can not expand. Business can not hire additional workers and pay salaries. No lending is done. Too little cash is in circulation. Solution: Increase the amount of paper in circulation. Print more dollars relative to gold. Ah, but we're no longer on the gold standard, right? So since 1964 this method is no longer valid.

SO, solution in modern times: DECREASE INTEREST RATES. Make it attractive for people and businesses to borrow money. Deficit spend and use government cash to increase cash in circulation. Yes, lend people small dollars amounts, using the power of leverage, to spur liquidity of cash in the circulation.

But wait, doesn't government spending mean bad? The government is those WHO PRINT MONEY IN THE FIRST PLACE. The VALUE OF MONEY IS CREATED BY THE GOVERNMENT IN THE FIRST PLACE. That dollar in your pocket has value, and is not simply a piece of paper BECAUSE THE GOVERNMENT SAYS THAT IT IS. It's taking money from your left hand, the hand that printed the money, and moving it to your right hand, the hand that controls interest rates and the value of money. (yes, I'm making a slight distinction,the cost of borrowing is indeed the cost of money, in the form of interest charged).

You can not separate the HOUSING CRISIS from the overall economy as a whole. That is what my point to you is.

Inflation: You must cool the amount of money in circulation to increase its value
Recession: You must INCREASE the amount of money in circulation, and must make money more liquid.

Go back to ECONOMICS 101. Government spending and regulation of money has been around since the Industrial Revolution of the late 19th Century and early 20th Century. Yes, we live in a free market economoy, i.e: CAPITALISM, but it is NOT without regulation of GOVERNMENT. MERCANTALISM of the 19th Century is PURE free Market Capitalism. It is what led to the great Depression....no regulation of any kind. It existed from 1868-1929. It is GONE since 1930. Read your history books. Do NOT confuse MERCANTALISM WITH CAPITALISM. Capitalism is free market with government regulation of cash supply and control of Monopolies and Banking, combined with a Tax structure that stabilizes the economy.

What does this have to do with the tax credit: EVERYTHING. We are in a RECESSION. Again, go back and re-read history. It repeats itself.

I've seen estimates that say more than 350,000 homes sold due to the FTHB tax credit. If that's true, then the "cost" has been about $2.8 billion dollars. Not likely to bankrupt our future (by itself).

Up until the "bubble burst" our economy was rolling based primarily on consumer spending and low interest rates. Did it get a little out of hand? Absolutely, but my point is the $8000 credit is not money that just disappears.

What do you suppose will happen when people start getting that check?

Of course some people will spend it foolishly, they always do, but others will save it, others will buy things for their home (might help employment and sales tax revenues), others will pay off credit card debt (wouldn't that be something?), some might buy a car (hello Detroit!)

The tax credit is not lost money, unless someone takes the cash and stuffs it in their mattress or goes to Vegas (Nevada could use the extra revenue), it will make it's way back into the economy in some form.

We're not going to have a recovering without a vibrant housing market and if you live in an area that is teeming with foreclosures and short sales, there is no move up market only First Time Home Buyers and it's likely to stay this way for a long time.

Besides all the "thought leaders" who lost their homes in 2007 will soon be back in the market as First Time Home Buyers.

I say stop all government interferrence. Let the paople who can afford to buy houses buy them. Not everyone should own a home, some are not responsible enough for a home. This idea that everyone should own a home is just unreal. Life is a balance and we will pay for the last 4 years for a long,long time.

Lane:

You certainly lack imagination! ;-)

At the risk of sounding "Monty Pythonesque", let's make it a $200k tax credit AND free health care AND a new car AND a big screen, HDTV (with the premium satellite package)...and a parrot!!!

I would vote for that!!!

Seriously, it's embarrassing that many did not see the hyperbole of your suggestion to introduce the insanity of the smaller issue.

Here's the REAL problem -- which is really two.

As Cash for Cankers (Ooops! I mean, clunkers) suggested, we are only pulling forward demand, NOT CREATING NEW DEMAND. Until REAL, SUSTAINED DEMAND takes hold, prices will retreat.
- In all likelihood, our historical rate of home ownership (around 61-62%) will be revisited. We were up around 68-69% for a while. That 7-8% (or the majority thereof) of homes will come back into the market. It took about 10 years to create this mess, it will be about 1/2 that time to climb out of it.
- By the way, 7% of about 128 million homes nationwide (American Housing Survey) is about 9 million homes. So, that is the upper bound of the problem as I see it, barring deeper economic deterioration, and "strategic foreclosures" jumping into the mix.
In failing to put a firm deadline on the tax credit, the "call to action" disappears. That's basic marketing.
- Why do you think Billy Mays was SO successful?!?! If you act now, ....(fill in your call to action here).

As Reagan said, "Government is not the solution, it's the problem."

Whether liberal or conservative, both trains of thought agree on one thing: people are self motivated. One relies on the market to compel action, the other governmental heavy-handedness.

Let the tax credit lapse. Let the market do its thing. Then, pick up the pieces when it's done.

i don't see people buying simply because of the tax credit. most people are out of the crazy logic we saw years ago.

Of course people don't realize where the money is coming from. Just like people think that their doctor really costs $30 a visit, their prescriptions really cost $20 because all they pay is their co-pay. So they mindlessly agree to any and every expensive procedure their doctor suggests, making the doctor rich and insurance premiums go up so that people like me can no longer afford coverage. The problem is systemic, we have an overwhelming ignorance of how things work in this country, and the entitlement mentality has drugged the masses. The housing boom led people to believe even more in "free money", as did the stock market boom and the internet boom. No longer do people believe in honest hard work and self reliance. God help us, and I am afraid He helps those who help themsleves, and right now so many people think the government is the one who is supposed to do it!!!

This attitude took a long time to create. It will take a long time and a lot of hard work to change. To save our nation, we MUST take steps to educate everybody about how things work! If you are interested in learning more and helping to educate people you know, go to www.SuwaneeTeaParty.org and www.WeThePeopleRevolution.com . We The People offers a class called "Next Steps", which teaches basic principles of Constitutional government. www.AmericansForProsperity.com teaches basic free market principles. If you want to return to prosperity, you need to be active in helping us to turn this damaging tide!

Lane,

This is a take off on Rush Limbaugh's argument against the minimum wage (which I agree with). The Tax credit at least has some relationship to what people are paying in taxes. I would actually prefer across the board tax cuts for everyone up and down the line, businesses too; but we ain't gonna get them. In fact with the Bush Tax cuts expiring we better take what we can get from government in terms of tax relief. You could use the same arguments (over stating the amount) for tax cuts or taxes, or any sort of arbitrary government spending or taxing.

I agree that a 100k tax credit would be ludicrous. But it doesn't follow that an 8k tax credit is. Remember that it's not 8k in free money; part of that is to offset tax liability, and many are only receiving a portion of the 8k. I understand the law of unintended consequences, but the government is already heavily involved in the housing market. If they were to take a totally hands off approach, we wouldn't have any government programs, FHA, mortgage deductions, etc. One could argue that that would be a good thing, but the 8k credit is a drop in the bucket compared to those other factors. And how many other than the very rich could afford a home without tax incentives and government programs?

The current tax credit is one of the few things in the stimulus package that is actually stimulus, and first-time buyers have dominated the market in the last year. I can't prove that the credits are responsible, but it is likely that it has had some positive effect. And now that credit restrictions have tightened, there is more stability for those buyers, and they are less likely to default. The tax credit has to be paid back if the buyers don't stay put for 3 years, so again, more stability.

And whatever people are spending the money on: repairs, furnishings, appliances, even a vacation, that is more money back into the economy and more tax revenue. That is the purpose of a stimulus.

A few months? How about a few weeks. How many first time buyers do you think will be writing offers once they know that there is no chance of closing in time for the tax credit? December is going to be very quiet for those who put all of their eggs in the first time buyer basket.

If our Federal Government had not been so quick to handover the Bailout Billions to the Bankers....we would see much more motivation on behalf of Bankers to liquidate their Short Sales and Foreclosures. Now, that the Banks are "flush" with cash...they have little to no motivation to seriously address the Short Sale and Foreclosure problem! Until these are addressed we are in for a long haul up the hill of recovery. We expect to see real estate values further decline regardless of the Tax Credit here in Florida.

Once again, our Government has interceded and only made the problem worse!

Anyone want to discuss Government run healthcare? LOL

So many great points/counterpoints here. I see both sides, but what I LOVE about this post is that the subject is evoking the response that it has...and maybe some new, great ideas will come from it.

I personally don't think they should extend the current tax credit - it will dumb down the incentive in my opinion. There will have to be continued stimulus incentives of some kind. My beef is with the banking industry right now. Throwing the baby out with the bath water; not writing and following through on good loans, Short Sale delays and the STUPID process, and centralizing their operations for market control, not expediency...these are the serious, priority issues for our economy.

Not every one should own a home! We saw how many were pushed into home ownership with the down payment assistance and sellers/builders/developers paying for the closing costs.

Stop giving our money away. Let's reconsider all government spending! Programs that benefit only a few people have never been fair nor have they worked well.

Fasinating to read the comments.

My comment is strictly from a data perspective, as we at Zillow actually just partnered with Harris Interactive to try to get some numbers behind this. According to our anaylsis the extended tax credit could, at minimum, stimulate an additional 334,000 home sales compared to what we would otherwise expect to see during the period between December 2009 and November 2010.

This would be a 5% increase in annual home sales with the tax credit, verses a 2% decline without it.

To get those 334,000 incremental sales, we'll have to give the tax credit to an estimated 1.86 million first-time home buyers, creating a net cost to the government of $14.86 billion for the extension. And we found that for every five homeowners who get the tax credit, four of them would have bought the home anyway. In essence, this means that the government will have to pay roughly $44,000 per home in order to obtain 334,000 more home sales than would have occurred without the tax credit.

The tax credit has been like a morphine drip on the body of a housing market clearly in pain. The credit, like morphine, takes the pain away for a while, but the underlying cause of the pain is still there. The pain will never go away as long as the patient is doped up on tax credit morphine. Like some here, we also appreciate what the credit has done, but it's time to get off the painkillers and fix the underlying problem. And, you know what happens when you're on morphine, or any temporary painkiller, too long...

Lane,

way to point out the absurdity of what is going on today. As Mike #53 intimated, lack of knowledge of what taxes are and where they come from makes this stuff possible.

Most people don't care to know until it affects them. Just as absurd (or not, politics considered)is how these idiots in power determine who gets the handout.

Take loan mods....if your paper wasn't owned by Fannie or Freddie and some Chinese investor instead...you're toast...no mod or no pressure on your bank to mod. Isn't that discriminatory? I thought we were supposed to be getting past that. Sounds like something trial lawyers should look into, some possible class action action.

Why is this tax credit not extended to the those who really need it as mentioned by some comments above, like the guy sitting on an upside down property? Better yet why not give a credit to those who have taken big hits in pay or can't find a job?

The reason for the increase in first time buyers, imo, low rates, tanked prices and values, not the 8K coming out of everyone's wallet.

Just my 2cents, great post.

Always encouraging my first time homebuyers to use their tax credit to make improvements on their home, thus increasing the value. I've read that for every home sale there is $62K that goes back into the economy in the form of RE & Property taxes, realtor, lender & title fees, new purchases for the new house etc.(furniture, carpet, dogs for the back yard) Where does the $62K number come from? Seems high, but if I can convince my FTHB to put up guttering and a fence it helpts the gutter guy & the fence company.

As long as the govnmt is dolling out the $$$.... - but FUNDAMENTALLY I am opposed to it and have not petitioned with the NAR to keep it going. We all pay for it in the long run and all of this wreckless spending by our govmt could ultimately keep the vicious cycle of home buying > job losses > foreclosures, if they continue raising our taxes to pay for it. Especially when they raise the taxes of the small business owners - who provide the jobs for the people who are buying those first time homes!

And now, if the govmnt gets their way, they'll be forcing those SBO's to buy health insurance for all of their employees. I provide my own coverage, at my own expence. By choice I do not have a plasma screen tv, but I DO have health insurance! Oops, got offtrack!

STOP THE INSANITY!

Again, those who depended on Socialism and the current Social Order in Washington to save Realtors will be disappointed. I predict that we will see what happens when buyers are no longer PAID to buy a home starting next month.

Realtors have no business aligning themselves with Anti-Capitalists because the sale of real estate IS a historically Capitalist act. One buys a home for shelter and for the possibility of equity build by paying down the loan AND possible up side on the value over time. SOOOOOO...lets just kill the Capitalist Goose which has lain golden eggs in America for 235 years.

Where did we find the current leaders of NAR? They are FOR every Social Engineering program and AGAINST every Capitalist program that comes down the Congressional turnpike. Why doesn't the NAR leaders lobby for Good Business Practices in the lending business?

If the banks needed to sell their non-performing assets at Fair Market Value, in a prudent period of time, the real estate market would reach a REAL bottom. Painful but necessary for the next cycle to begin. The current NAR strategy is condemning America to 10 to 15 years of economic doldrums, sort of like Japan in the mid 90s.

Here's an example of what's coming next for Realtors.

Q: Why is no one buying a car this month?

A: They're not being paid to buy one! The auto industry "pre-sold" 1 to 2 years of car buyers in 2 weeks. And, since the US auto makers have such a bad reputation, the Lion's share of sales went to foreign car makers. The ill considered US subsidies went to the Japanese and South Korean car makers.

FAIR MARKET VALUE:WHY NOT JUST DEMAND THAT ANY HOME THAT GOES TO FORECLOSURE BE SOLD, IMMEDIATELY, AT "FAIR MARKET VALUE"? Banks are dribbling their REOs into the market to keep the price more competitive...because the Fed has given them so much tax money that they don't feel any pressure to sell these Non-Performing assets. In a REAL economy, the banks would have to sell or be unable to make loans because of their Federal Asset Requirements. Not now, the Fed is subsidizing their balance sheets so no "pain" is experienced.

SHORT SALES: WHY NOT JUST DEMAND THAT LENDERS CONSIDER SHORT SALE OFFERS WITHING 10 BUSINESS DAYS? What would happen in the next 11 to 90 to 180 days to change the Fair Market Value of said home? However, the banks have so much Fed money that they don't need to respond. Even though they lose money on each foreclosure (a lot of money) they don't care because WE the People are paying them to defy "good business practices".

When the Tsunami of new foreclosures hit the market next year (hundreds of thousands of AA credit quality Alt-A loans began resetting in July 09) the real estate market MUST be allowed to find a real, unsupported, unfettered bottom.

If not, Realtors will be condemned to lobbying and begging, year after year, for another bigger, better, more ridiculous Subsidy to pay people to buy homes. Tom Waite, Orange County CA

In my honest opinion, the tax credit has benefited only certain regions of the country, whereas the entire nation is paying taxes (and interest on the national debt) for underwriting this credit. It is time for free enterprise to take over and take a look at why people seem to think that they need to buy a house, when renting is a very viable option - and actually one that is more financially responsible.

Just think, if the banks weren't tied up closing $200,000 loans, they could take that money and finance the jumbo loans that represent the real contributors to our society. Painfully honest. But true.

I am soooo glad that you wrote this, because it was exactly what I was thinking!! I keep getting emails from NAR to support this tax credit and that tax credit, and for the first time I am not supporting it and deleting the email.

In my market I have benefitted heavily from the tax credit as first time homebuyers are my primary business. I know the reality though and I want it to go away! We need to get back to the basics of homebuying.

Here are a few things that I would like to see NAR backing...

-HUD/Fannie Mae/Freddie Mac - Lets help get these guys back on track. Some of the latest ideas I have heard come from each have been the worst ideas I have heard in a long time, they need our input!!

-Get rid of the 3 month hold period for flipping houses.

-Get a straightforward system that everyone uses for short sales that benefits the Lender, the distressed homeowner, the buyer, and the agents.

-Have a more long term fiscally conservative outlook on homebuying, and educate the public that it's a long term purchase/investment.

-Have HUD reinstate the old program where anyone can assume an FHA financed home, without qualification. The new homeowner just takes over where the last one left off. Whats the worst that can happen? If it doesn't work out then they foreclose on a home later then they originally intended??

These are just a few of the issues that need to be fixed. I'm sure we as a whole could produce plenty more that would benefit the market over the long term more than a tax credit.

Each real estate market is different, state to state and even city to city. I have heard many people say that the tax credit hasn't benefitted their market at all. Lets leave the tax credits and grants up to the states and the cities. They can then decide what works best for them and utilize their money, not the nations.

Just my thoughts, sorry for the long comment, but you got me going. :)

It seems to me that we are playing with the economy like someone trying to build a match stick house. When it seems in danger of falling, we try to support it with another match stick. Sincerely hope that the builders of this match stick house can keep adding to it so it dosn't collapse.

Still not sure how I feel, great arguments on both sides!

Even though I live in a second-home vacation area (Lake Tahoe/Truckee) I work primarily with first-time buyers who are the work force of this community. I have found that most aren't even fully aware of the tax credit and what it means for them. They arent sure how it works or how it comes to them but it is not their primary motivation for looking for property. Most of them are looking because they recognize that this is one of the best times in history to purchase a home. The tax credit, if the timing works for them and it is still available, is the icing on the cake. As their realtor, I dont want to hurry them into purchasing simply to get a credit; They should be able to negotiate a good price for a home regardless of any icing on the cake.

Petty good explanation as to why bailouts will not work. Bailouts do not create jobs. Until the job market comes back the market will flounder. Shovel ready jobs that last two weeks won't cut it. Long term jobs are needed to pay the monthly payments of 15 and 30 year mortgages. Until then interest rates need to be kept low to keep the market from completely tanking.

Lane,

I just got my flood insurance bill.......... which has AGAIN increased!!!!!..... Why can't I have some of this NEWLY MINTED money that is flowing so freely?????

I'm whining..... but it will pass....

Kathy Opatka

Not only has 50% of this years sales been to first time home Buyers, but about 1/3 of all sales are either foreclosures or short sales. Without the $ 8000 tax credit, many of these foreclosures would still be sitting. Should we let the Banks and Financial markets cry mercy to the Government yet again with their hands out for bail-out money? We have seen what they did with the first $ 700 Billion-Nothing! At least by putting the money in the Consumer's hands, it will be used to not only stimulate housing sales but also many other industries that supply goods and services to the Home Owner. This IS trickle down economy at work. Yes, I agree it is like a drug habit that will be hard to kick later-But sometimes medicine can get addicting before the cure is made. Deal with one issue at a time-right now the issue is that we have the worst housing market in 28 years.

I love it and I am amazed at the logic!!! the only problem I forsee is that the government would see nothing wrong with it as it would "stimulate" the economy now.

Reading this post, and the comments that it generated, was certainly educational, to say the least.

I am of the mind that we really don't know exactly how much good (or harm) the tax credit has done for the economy overall. Extending it for a few moe months, without making too many changes in it, and then letting it die out, sit back and look at the data that emerges from it is one option that I think should be pursued.

Great post. It's refreshing to hear another agent that makes sense and gets it.

Shevy

Lane,

The credit is stimulating activity mostly at the lower priced end of our market but is certainly not the catalyst for sales activity here. And from the way it's playing out here, it really wouldn't matter if it continued.

Lane - you put this in such great perspective. Well done! Hopefully it get's more people thinking.

Lane you got them all stirred up. I was listening to an economicist being interviewed on NPR the other day and she was speaking of incentives in general as stimulators for the economic growth. Her point was they worked if they were used for a short period of time and then done away with.

The issue I see with the $8000.00 first time buyer credit is that the bulk of the people it applies to are "marginal loans" on the books of bankers and that is one thing we do not need more of. It (in my opinion) is a crutch given to a group that carries political sympathy.

Lane, this is by far the best thread ever. People really discussing an "issue", social networking at its finest. I thought my post yesterday on whether an agent should have some basic financing knowledge was important. I'm pulling it down, it pales in comparison.

You're right let's get the government completely out of the housing market (all the markets for that matter) and let true capitalism take over.

First, let's take the money away from the banks that are holding back on foreclosures and not negotiating on short sales. That'll fix 'em. Oh wait a minute, isn't that government intervention too?

Let's not forget to repeal the Mortgage Debt Forgiveness Act, so all those people who lost their homes, now owe the IRS hundreds of thousands of dollars each. Let's see if that ever gets repaid.

Many of you advocated getting rid of the $8000 tax credit so the market could right its own ship. Let's get the government out of the housing market all together. I'm not sure how the market will right itself if we dissolve FHA and VA home loan programs because they are after all government agencies. Where will the money come from in this new "governmentless" housing market?

Someone else mentioned getting the government out of the housing market and keeping interest rates low. Not sure how that will work, the biggest purchaser of mortgage backed securities is the government. The Chinese would pull their money out of our market in record time if they felt the US didn't have confidence in its financial markets.

Speaking of financial markets, the banks have to pay back all the money they received in the bailout, how is that going to affect its depositors? No worries, we won't have the FDIC around anymore to insure them, so everyone can go back to stuffing their money in the mattress. If they bury it in a coffee can in their backyard, does that make their house worth more money?

Your right, let's get the government out, really out! We may all be broke, but it's definitely going to be an "E" ticket ride.

I agree with most of the posts here. The $8000 was very successful at getting the "lower-priced" homes moving in our market, and honestly has helped in a big way. Our market is starting to turn. I am against extending the tax credit, although if we are going to have it extended, I am in favor of a much smaller one, maybe $4000???

of course NAR would be all the way behind hit hell they want the new 15k credit to go through I really hope that 8k expires

It is amazing to me what everyone has written. Lots of great ideas, but do any of us really know what we are doing. This is all such a complicatd matter that I do not think any of us, even the government, knows what we are doing. That is my call. Even time will not tell if what we did was right because there are just too many variables.

Lane,

I just had to laugh when I saw your Blog! It's been in my thoughts! I feel that we have already created a climate of entitlement in this country, and adding to it everyday! It's a wicked market! If you don't give them money to buy a home, they can't buy one, if you do give them money to buy a home, it was so EASY!

I could go on and on, but I will limit this post to a single comment. Our country needs to work, saving money, and then go out and buy the 'things' they want to have in there life, like a home.

Back to basics!

Thanks for the great post!

I hear a lot about how FDR had all these programs that got us out of the Great Depression. In reality, his programs and government intervention prolonged the depression by several years. All of the money that has been spent in stimulus packages will come back as inflation down the line. Interest rates will have to go up in order to curb the inflation caused by the printing of new money.

I agree that the tax credit should be phased out. I work with first time buyers, the credit is what we used to call in the corporate world a "nice to have", but it is not necessary in order to sell homes at a fair price. Parts of California could use a deflation of home values to get back in line with wages and what people can actually afford to purchase. And yes, I own a home here that will lose value. I am a homeowner in it for the long term investment, not short term flipping. That is was property has traditionally been, long term investments. JMHO

Great eye catching way. It catches peoples' attention and forces them to think a bit about the whole credit as well as who it impacts and how.

Bravo.

Todd Anderson

www.YouInParkCity.com

Amen and amen. I received a "Call To Action" from NAR, and I did not fill it out. I want the tax credit to go away. I'm so glad I'm not alone!

My, my, my. There is such a thing as moderation. Yes, a $100,000 tax credit is absurd.

If we need to banish the $8,000 tax credit, should we also banish the mortage interest deduction? Just curious...

My comment is far too long for the comment section so it's here.

I am a Conservative. I am a Republican. I have even been GOP county chair here. But I bolted in 1992 - along with millions of others - to help Ross Perot point out how dangerous the federal budget deficit was.

I would ordinarily not champion any federal give-away program.

But:

This recession was precipitated by a housing bust. The housing bust was the inevitable outcome of a housing boom BROUGHT ON BY STUPID PUBLIC POLICY AT THE FEDERAL LEVEL - participated in by both parties in the Congress and two REPEAT two administrations. It was brought on by greed and dishonesty in the lending arena - all the way from lying loan officers through the rotten top echelons of nearly every bank in America through the political fat cat appointees at Fanny and on through to genius millionaires at AIG (What? Me worry? Inc.) Those dumb policies were clearly supported all-the-way by NAR.

But, but:

The bust has destroyed a lot more than homes values. It has destroyed lives. It has ruined people.

Something needed to be done.

A lot of things were done. Most have been of questionable impact...even politically, let alone economically.

But the $8000 tax credit HAS worked. Homes at the low end have been chased by more buyers - not unqualified buyers, just buyers. Prices have firmed at that end almost all over the country. Case-Shiller now shows home prices up in 18 of 20 cities for the first time in three years.

Just take a look at the Case-Shiller index for Portland, OR over the last 22 years (which I just happen to have handy):

Case-Shiller Index for Portland, OR graphed through July, 2009

Remember, the data behind the index began being tabulated in 1987, but has all been calibrated so that a value of 100 on the Index is equal to the level of Portland home prices in January, 2000.

The Portland graph is pretty well representative of the other 19 Metro areas. It shows just how abnormal the boom was. It shows just how dramatic the bust has been. It show housing prices turning upward in the last few months.

Yes, the tax credit accelerated (it did not create) demand. Yes, continued forever it will cause demand-pull inflation in prices.

Yes, most of the money has gone to remodel or furnish the homes purchased, to pay off family debt or to purchase durables. A lot of it was probably spent frivolously. But all that is reflected in the smattering of good news from corporate quarterly reports.

Have we turned the corner? Maybe. Will continuing the tax credit be enough to continue to save the housing market in the face of further unemployment and REO sales? I don't know.

But neither do those of you who are standing so pat on your ideology.

The economy, at it's most basic, runs on faith.

That faith brings people to work.

But faith without a little federal fiscal and monetary policy is dead-on-arrival in any economy above the village level.

WOW... Lots of comments. some great... some completely off the point... some will get answers a little later when I have a moment. Alexander Gonta, I will be responding to you... Your comment is wrong on multiple points, and off-track on others. The question is whether I will comment or write a post just to shoot you down.

So many of the rest of you are making great points... some for, some against. And I LOVE that people are disagreeing with the post. Obviously, I think I am right, but that doesn't mean that there isn't room for discussion. Bring it!

What we REALLY need is the NAR hosting discussions like this.

Thank you again, and I will be posting up answers and comments in a little while... I have, however, read every single comment, and will be reading all of them again before I answer.

And BTW:

The tax credit was not the idea of the NAR. Nor was it the idea of the Obama administation.

Both were late players.

It is the idea of Senator Izakson (R-GA), a former real estate broker.

In turn, as he would tell you, he was merely borrowing from history.

And I'm with Margaret (see number 98 above):

If you don't like the government involved in real estate, how about we not only throw out the mortgage interest deduction, but the ability to deduct depreciation as well?

Lane,

Excellent!!! I saw several BLOGs about extending... and the posts were yeah!!!!!! I disagreed with it. Your post I full agree and the most important reason is your "why". This robinhood of tax and give away is bad for all of us including our kids, grandkids... you get the picture. People who support this is STEALING from our kids. Of course, the crack analogy is on target.

I hope this helps.

Tony

When you get a 10% off coupon, you tend to buy the thing that coupon is for.

In this case, houses. I completely agree with your point. I also think that our grandchildren will still be paying off the deficit created by the 8k tax credit. Unlike the tax credit from last year, the buyer is never saddled with the 'burden' of repayment. This is simply a gift of taxpayer money to a first time homebuyer. I'm happy for my clients who can use this benefit, but I'm not happy that such a credit will never be repaid by the recipient.

Unlike the cost of the coupon which is calculated into the cost of the good as a marketing cost, the tax credit is real dollars from our real tax base. Wouldn’t it have been better to fix lending so that those who have handled their money and assets well would be allowed to extend further and buy up the foreclosures and short sales.

As for how we got here in the first place – two things happened in the mid ‘90’s to create this.

First, homeowners were allowed to take their capital gains from their houses every two years – instead of the one time – over 55 allowance. This cut the equity out of nearly every property in the US. Without that equity position, the real estate market lost the resilience to withstand a significant price fluctuation.

Second, lending moved to rely too heavily on the credit score instead of a time tested means of coupling the debt to income ratio and collateral value. In other words, we went from a real ‘nuts and bolts’ method of means testing to an algorithm nobody could understand. When you run into a client who has 100k in the bank, an income and no debt whatsoever – and also no credit score, so that he/she cannot get financing – you’ll understand that something is wrong with that system.

So a market that has had the flexibility taken out of it converges with a method of lending that takes the sense out of it – something will break. And right now, I’m afraid it’s going to be the US taxpayer. Heck, I feel pretty broke.

Sure wish I had a 10% off coupon.

Gosh - don't know where all the extra code came from. it wasn't there when I pushed submit.

I agree with you on the large number of $100,000 tax credit. I can see some potential issues with the smaller credit, but perhaps it doesn't seem as big an issue because it's a smaller number.

In our market, the $8K credit hasn't had much effect. We're a mostly second home market. In the past few years, much too expensive for many first time buyers. But it's true, the people I have talked to have no idea where the money is coming from.... $100K would certainly make for an immediate uptick though :-)

This issue seems very contentious but if it helps, in the short-term, stabilize the US housing market, I think it would be worth it.

As a taxpayer myself; I wouldn't mind not paying for once OR getting some of my money back. I think the tax credit should be extended to $10k for everyone in 2010. That way sellers who want to move up have an equal opportunity. The government can just print more money! Just kidding!

If the idea behind the tax credit is to get more buyers into the market, what's wrong with the feds reducing the wait time for otherwise credit worthy former short sale & foreclosure owners so they can re-buy sooner. What a concept. Let them rebuy in say 12 - 15 months after, if their credit has been clean since. Maybe charge them an extra 1/2 point interest. The lenders make money, the market continues to return to normalization, people are happy re-buying, REALTORS are happy with the increase in normal sales, It's a happy life again. Well we can hope can't we? I'm just saying it makes sence, that's probably why we won't see it happen.

Holy crap--considering you people all work in real estate, a lot of you sure do seem to be hopelessly clueless. Although I have several points to make, I'll keep it short and just make one:

Something many of you don't seem to understand is that virtually every time a first time buyer purchases a home, that allows the seller of that home to trade up to another property, which in turn may set loose still another seller to trade up, which in turn sets loose another seller, and on down the line. To oversimplify: if that first-time buyer never takes that property off the first seller's hands, then none of those other properties can sell, everything freezes up, and the market goes into freefall. Many of you stop thinking this through at the most basic level (the first sale), amazingly neglecting to consider the obvious ramifications of freeing up 334,000 sellers (Zillows estimate of credit-inspired purchases) to go out and spend 334,000 large windfalls on new houses or other consumer items that they otherwise WOULD NOT HAVE SPENT. That trend continues in a cascading effect and helps the economy at large.

...so when you're calculating the cost/benefit of the tax credit, you can't JUST lookat that initial sale and pretend that's the whole picture--its not even close.

You NIMBY realtors catering to rich old people benefit too, even if you're too short-sighted to see it. Case in point--if fat cat A can't sell his McMansion to some guy who just sold a 3br craftsman and wants to trade up, he won't be able to buy that Miami condo this year. How galling it must be for the rich to know they have to rely on unwashed peons to keep them afloat.

Specifically I'm looking at the poster at #75, who doesn't seem to understand that without people to, you know, actually buy stuff and generate revenue, those jumbo-loan-seeking "real contributors" to society contribute less than squat (sorry, bub, but Feudalism went out of style a couple centuries back). Are most realtors so callously conservative and money-driven, or just the cross-section on this website?

OK, I am back from hanging with the family for a little while...

Steve #12 - Those things were happening while the market was tanking BEFORE the tax credit... why is it going to be a boon to the market after the tax credit?

Karen #15 - I work with a cross section of buyers... But that doesn't matter. The tax credit is propping up prices REDUCING affordability for entry level buyers. And when it stops, prices will drop. When they drop enough, people will start to buy again.

David #16 - You didn't actually make a point that has anything to do with the discussion at hand.

LoansumLou #19 - I didn't say that it didn't benefit me. Rather I am saying that the long term effect on ALL of us is negative, and in order to do right by my children and my neighbors, we need to get past thinking that the government is Mommy and will pick us up and clean off our boo-boos.

David #25 - So, your point is that it is OK because you don't like other spending? They are still spending just as much on everything else... And at least defense is Constitutionally mandated...

Steve #28 - Different discussion... But when you start talking about Social Security, you should Google Galveston, TX at the same time...

Roman #30 - I think politicians are bigger idiots...

Aaron #32 - Feel free to give back to 25 points... And you are always free to not read my post. You've already demonstrated that you couldn't add value to the discussion...

Paul #34 - And will the market be just ducky in January? Or will we have taken future sales with the tax credit? And I was quite upset that GWB didn't exercise the veto pen to control Congress... But, you should also know that the fed took in more money than ever after those tax reductions... they spent too much. the new administration is doubling down on the spending while slowing the economy further and reducing tax receipts...

Brian Brady #39 - We agree about a lot... and disagree about a lot... We agree here and thank you for the compliment.

Colleen #41 - You should read Sara's comment #70. And if I was iron deficient, wouldn't it be better to change my diet than try to take pills to correct it? This stimulus is more like chemotherapy to correct a self-imposed cancer. Stop the self-imposed cancer...

Howard #48 - $25,000 for people that are upside-down? What about those of us that aren't? Maybe everyone should get #25k... After all, even people in apartments pay taxes, shouldn't they get something too?

Gregg #54 - A celebrity in our midst... and thank you for the compliment. ;^ )

Alexander #57 - You are going to get a blog post...

Sara #70 - Thank you for posting the stats. That really adds a new dimension to the discussion.

Mark #83 - As Sara pointed out in #70, on average 4 of the 5 people that bought would have bought anyway... So we are paying for 5 tax credits to get one sale. And if the prices kept dropping for the foreclosures, that 5th buyer might have dived in, too...

Greg #90 - Actually... until recently the GSEs weren't really buyers as much as packagers. That could have been done by a private entity as well. And the people that were doing it at Fannie and Freddie should be doing perp walks for their malfeasance.

I'm not opposed to a private version of the FDIC...

Margaret #98 - I am a FairTaxer, so I think that the mortgage interest deduction should go away with the IRS.

Dave #99 - I thnk that the problem is that the patient has a serious cut on the leg, and the medic is doing chest compressions without addressing the bleeding... And if you are interested in Dave's response, it is here.

Jim #100 - The housing bust was a symptom. The disease hasn't been diagnosed by the government... It is SPENDING. People, businesses and government have been over-leveraged for a long time. Debt levels have increased... More debt is not the solution to debt, despite Joe Biden's "logic". And the credit hasn't "turned" the market, it is just a speedbump. When it stops, the market will drop again. BTW, I know that one of my Senators was behind the credit... he was looking out for us more than for the US.

Tucker #105 - The junk code is from writing your comment in Word and then directly pasting it into the comment box.

Miranda #110 - Is short term stabilization worth long term damage?

Anon #112 - I think you are right that the GSEs and FHA should lower the time limit on BKs and foreclosures... but the banks should be free to have tighter standards.

J #113 - There is something that many of us DO understand is that in this cycle, MOST of the sales do NOT result in a move up buyer... they result in a bank taking a property off their books. But even skipping that... should we be for the credit simply because it increases our income? For most of us, we are MORE interested in the long term implications to the real estate market than we are in making a quick buck. Hardly being the money grubbers you are accusing us of being.

You can do better... ;^ )

Lane,

Your my new hero!

Gee Lane, That would be to smart and not go with big business. As we know the Foreclosure Services taht most banks own under a different name make 50,000 to $75,000 per foreclosure and now wknow why the banks don't care about making $15,000.00 for a short sale.

Now as far as equity in the property that is not good for the banks either since they only make a small % of the interest and service fee on the Loan so it is again all about the Big Money and not the American Taxpayers as they pretend to sound off.

Check out Dan Rathers disclosing that all of the Prime time news is controlled by big business who is controlled by the Government. Yes, this may sound normal but we in corrupt times and now we need to get the truth from Cable News like FoxNews.com

Thank God America is watching and listening, I heard that Fox News Shows are the top 13 in all cable shows...People are getting the truth now we just need a list of Members of the Government that voted for the Stimulus and ObamaCare and let them know we will Vote them Out in 2010 if they don't stop these bills...

I hear another stimulus package is on the way, even the Liberals are no longer fooled...AMEN!

Obamacare pass this on , some states cut a deal with the Senate before they passed this that his bill would not increase their taxes and some like Nebraska and California are going to pass on the costs to us under State Taxes so we can all pretend Obama kept his promise on not raising the middleclass taxes..This is evil.

Call your Senators and Congressman and tell them Vote No or vote them out in 2010.. Don't let this country be ruined by these people.

Lane @ 115 - Well, now I think we we both misspoke, since even with astonishingly high foreclosure rates, MOST sales are still not foreclosures/short sales (I think its something more like 31% of total sales nationally for September). Granted, I have no idea what percentage of first-time buyers bought foreclosures, but doubt it topped 50%. So, with the caveat that I have incomplete information, I would hazard a guess that we could BOTH do better...

That said, my basic point that the tax credit had a "ripple effect" as related to the larger economy still stands. For the record I think the credit has done about all the good it can do at this point and should be allowed to expire for many of the reasons you and others have mentioned. As an emergency measure it has done its job, but it does have its downside and needs to be ended before it does more harm than good.

I totally agree with you. The handouts, bailout, stimulus, Obama-machine that is not working should not be extended. For every reason you gave. What it does is create a snowball effect. Either it hurts a little now and recovers later. Or it doesn't hurt so bad right now, but kills us later.

Oh, and I agree with out about Aaron #32

But that is typically what libtards do when they have zero intelligence. They hurl names and profanities. You have to laugh because at least you succeeded in making their brains freeze for a second.

Kudos

You mean we cannot have our cake and eat it too? These questions are always going to spark debates for Realtors. On one hand it is putting money in our pockets in the short term. On the other we ask ourselves where is the money coming from and who will have to pay for it. Your going to get heated and great arguments for both sides. I applaud the president for taking an initiative to attempt to help the housing market and I believe he was correct in only applying it to first time home buyers.

It is simple supply and demand. First time home buyers did not own a home before.

Lets say 100,000 first time home buyers bought a home with the tax credit. Lets say that only 75% or 75,000 of the sellers bought a new home. Not only is that 175,000 real estate closings but a reduction in the supply of homes available on the market. Less homes are the market increases and more importantly stabilizes home prices. If it were extended to all buyers you would not see a decrease in homes are the market. At best we would have the same number of homes.

Wow amazing comments and thread I liked post 57 the best. I can't wait to see the rebuttal.

Alexander #57 - Here you go... Link to response.

Anon #118 - Less homes on the market DOES stabilize home prices... BUT, when the "gift" goes away, prices are MORE destabilized than before.

And let's say that 50% of First Timers bought foreclosures... Since it costs $44,500 for each created sale with the tax credit (sale that wouldn't have happened anyway... check comment 70), that means that we are spending $89,000 for each move up buyer that wouldn't have moved up right now otherwise. Damn.

I'm glad that we can agree that the credit needs to go away... We can go get a virtual beer together now.

Oh come on, Lane. Just let's all "give back" to the community with a joyful heart. You know none of us ever worked for anything the community gives to us. We never had to sacrifice nights, weekends and holidays for our community of customers (who never really know what we go through to do our job). We should joyfully offer $8000 (times all the home sales we funded with our community gift to the banks and lenders) back to the community which so lovingly gives to us in the form of tax checks sent to them from our kind hearted contribution of our community gifted wages. Everyone deserves a piece of our paychecks. It takes a village, dood, come on! Let's all give everything to everyone and live happily ever safely after! The lion and the lamb together, ya know?

Lane, Where did all these people come from? What have you done? :)

Lane - I am totally freaked out. You are hitting the nail on the head and taking no prisoners. Are you "juicing"? Great Job!

OCT

2009

Clever post Lane. You make some really great points. Very thought provoking.

I've thought the credit was a bad idea all along. It seems to have created a mini-bubble in the local market. It needs to GO AWAY!

Wait a minute, Lane. Let me steal a thought from elsewhere:

Do I get this right? According to Harris Interactive's survey:

18% said it would be the “primary influence” in their decision. 25% said it would be a “significant influence. 27% said it would have “some influence.

Let's see here: 18%+25%+27%=70%. Let me double check, yes, 70%!

So that means that extending tax credit would definitely influence two-thirds, or 70%, of prospective first-time homebuyers on their decision to purchase a home in 2010.

I guess there will always be people out there seeing the glass 70% empty instead of seeing it 70% full.

So, Lane: Which Sara-at-Zillow one-third of all first-time buyers are we talking about here? A 2009 one-third or a 2010 one-third who say it won't affect their decisions?

Lane -

I've looked at the Zillow report you cite.

The numbers you mention are not Zillow's number for the sales that have been "created" by the credit.

The numbers are Zillow estimates for the 12 months ending in November 30, 2010, if the credit is extended:

1.86 million "first-time" buyers.

338,000 extra buyers from the credit.

Let's see:

NAR is forecasting a 5% increase in home sales in the year ending November 30, 2010. That's a net increase of 215,000 sales - purchases by all types of buyers (on a current year base of 4.3 million).

Zillow says 334,000 from the credit or 7.5% of total sales.

This insignificant increase in sales you criticize so vehemently turns out to not be so insignificant at all -- it exceeds NAR's (always rosy) predicted increase.

That's a fact not lost on Zillow. Here's their chief economist, Stan Humphries:

“While 334,000 may seem like a small number relative to the total number of home buyers who would claim the credit, their addition to the market next year could make the difference between a robust annual increase in home sales next year and a flat or negative change in home sales relative to this year.”

All things considered, I recognize that there are pros and cons to having a tax credit in place. Yes, it is borrowing from our future. Yes, it costs the tax payers including myself a tremendous amount of money. Yes, it is a manipulation of the market which could have bad long term effects. However, the state that the housing market has gotten into has created drastic times that call for drastic measures to help clean up the mess. The hope and idea is that by the time the "borrowed" demand reduces future demand, the market will not be as flooded with foreclosures any more and will be better able to sustain the weakened future demand. With that said, I think the government made some MAJOR mistakes in the way this was handled including:

1. Going from a 7,500 credit that had to be repaid to an 8K credit that doesn't have to be repaid and now announcing the possibility that we might see as high as a 15K credit in the very near future has lead many buyers that would have taken advantage of the existing credit stay on the sidelines to wait for the better plan that is coming. The call to action has been minimized. Now, if the extension doesn't pass, we missed out on an opportunity to get some more foreclosures out of inventory. They should have picked a plan and stuck to it.

2. Increasing to 15K does not make sense. It will double the cost of the program to tax payers and will not likely generate any additional sales for which 8K wouldn't have also been enough motivation. it's overkill. It will also make those who took advantage of the 8K feel like they made a bad decision.

Both of the previous tax credit programs started out as 15K programs and, in the end a compromise of 8K was reached. I think NAR is getting behind asking for 15K because they know that way they will actually get 8K again. If they ask for 8, their fear is that they'd get only 4K, etc.

While I agree that there are definitely negative long term implications of these tax credit programs, I do believe that it is acting as a tourniquette in a way to stop the bleeding on our housing market and I don't believe that the market has recovered enough to sustain removing it yet. I would have liked to see the powers that be pick a number (i.e. 8K from the begining and stick with it) and keep their mouths shut about extending and/or expanding the program until AFTER the deadline expires or becomes very near. Then, announce an extension of the exact same program (not a better one) right after expiration of the original one - making it clear that the credit will not last forever and perhaps even setting a metric or goal at which point it will go away. For example, we will keep extending it until we get to a certain inventory levels, etc.

I like the idea of continuing the tax credit for at least a year. The cash for clunker program was like an adrenaline shot, a big artificial boost with little long term benefit. However, I see the tax credit more like a temporarily boost that will prop the RE market up until unemployment figures and the rest of the economy improve enough for the market to no longer need it. With all the focus being on the first time buyers, most people forget to mention that the tax credit helps move up buyers as they are selliing their homes to first timers and thus being able to buy. It is in a sense clearing up a huge log jam, at least here in Northeast Ohio.

I'm not sure the tax credit is actually "inflating" prices of homes, but I do thing that there are some homes that are not depreciating as quickly because of the demand and that would be the homes that the first timers are looking at!

Lane - Frankly, I haven't seen much excitement generated from the incentive/tax credit, so I don't think extending it would matter much to me. I suppose increasing it would help sales, at least in the short term, but it also might cause some damage that would be tough to overcome. That being said, nice tongue-in-cheek title for your post!

I'm with Jason on this that I haven't had all the hysteria that I thought their would be. When I mention it, most buyers just shrug and go 'yeah, I guess'. What that tells me is that they think now is a good time to buy inspite of the credit. In my area, we are not seeing any type of inflating of prices, in fact I think we are lucky to be selling anything! We've got tons of inventory and high market times compared to other areas. I just did Market Updates where the average days on market was 212! Things aren't exactly flying off the market!

Kent - Does Coca-Cola count?

Jim - Since you copy/pasted both of your comments on both posts... I answered on the other one.

Matthew - If they extend it again, they are signalling that it will be extended again... and maybe even again.

Dan and Amy - And when the credit stops and sales slow again... the log jam will be back.

Lyn - I have been involved in several multiple offer situations on entry level properties... But honestly, I think that there have been a lot of 2010 sales shifted to 2009... and that the tax credit will have a smaller effect than expected if extended. And the sales that DO happen will be stolen from 2011...

Every time I get an email from NAR requesting I contact my "representatives" in Congress regarding extending the tax credit, I immediately delete it.

Having sympathy for those losing their jobs and homes (including many in our industry) should have nothing to do with bankrupting the country or turning my grandkids (not yet born) into indentured servants for our government. Sorry, that fuzzy math just doesn't compute in the real world.

OCT

2009

So many people don't seem to realize that the tax credit is coming out of their pockets - and their grand-children's pockets.

The same goes for the entire "stimulus package" and the bail-outs to the banks.

I agree with Ronald Reagan - the government IS the problem.

They need to stop all this spending and let the markets correct themselves.

My first reaction (and you can ask the Realtors in the office sitting next to me) was "Finally someone thinks like I do!". Then I read people ripping into poor Lane and insulting comments too?!! I figured I better read through these and see what I can learn. Bottom line is I still feel the same. I thought the $7500 was a reasonable approach. I thought the $8K welfare method is a bad idea which I have to tell my buyers about like a pimp.

First off, I learned in grade school that when it comes to math and other things by extension, exageration can help you to understand fine points. I also understand sarcasm. For those who want you to read about FDR then you better understand that he extended a big recession that likely would have recovered in 2-3 years into a full blown depression that ultimately took the war to get us out of. Maybe we just don't have a big enough war going? (Sarcasm).

I don't really get why dropping home VALUES is such a big deal, IF you are staying in your home LONG TERM. That is the real problem and it seems that everything the government is doing is counter to keeping people in their homes, AKA, reducing JOB LOSS. When this administration gleefully plans to "tax the rich", well when was the last time you were hired by someone with less money than you? I remember hearing about the tax the rich plan called a yacht tax. All that happened was the rich bought elsewhere and guess what? It turns out (are you sitting down?) regular Janes and Joes were actually the ones building them! And I thought rich people drove up in big cars and got dirty all day working on them. Huh? Go figure. Point being the rich tend to have more options. This includes pulling up stake (and jobs) and going elsewhere. Or never taking that chance in the first place.

How about we scrap the IRS codes and implement an equal, flat tax and NO deductions. Then EVERYONE has "skin in the game" when it comes to SPENDING. I lstened to Glenn Back yesterday and they asked someone in line in Detroit waiting for "free money" where it came from. They gave credit to Obama, etc, but when pushed could NOT say WHERE the money actually came FROM. BTW, in this area, which did not have a boom/bust cycle, the FTHB credit did tend to push prices up for the lower priced housing (was that a help for buyers?) but decidedly did NOT extend to higher priced housing. Speculation is that many lateraled out. Perhaps Zillow can extrapolate some numbers on that? It DID bring people into the market who were NOT ready financially to buy but to take advantage of it, well, how many agents who were helped by this also saw people asking for maximum concessions? I think those people would have been better seved waiting until they were ready in a year but I don't think that is NAR's goal. I also think that the real engine for whatever sales this year has been the increadibly low interest rates. If they go away it won't matter much what incentive there is to buy. People won't be able to qualify like they can now.

To recap, forget the government vote payback plans, I mean "stimulus" plans. CUT spending. CUT programs. ENCOURAGE investment in business so that long term JOBS (the only way out of this mess) are CREATED.

YES! You got it. All this government intervention (i.e. expanding FHA lending, the tax credit, bank bailouts, etc.) is just distorting the market. The expanded FHA is just helping to inflate prices by expanding financing to buyers who really should be renters. The tax credit is allowing people with little to money to buy homes who really should not be buyers. Both of these government "stimulus programs" artificially inflate housing prices by creating additional home buyers. The bank bailouts, on the other hand, are allowing banks to be difficult in dealing with on short sales and loan modifications. If the banks did not receive the bailout monies they would be cutting short sale deals and offering loan modifications much more rapidly since both of those make business sense. Also, the banks are holding back on selling their REO's because they are hoping that the government will buy the defaulted loans for more than the real estate is worth. In short all of these government actions are distorting the market.

The real problem is what will happen when these government "stimulus programs" end. My view is that the real estate market will have a mini free fall. The tax credit is going to end soon (even if it is extended for a while) and when it does end there will be less buyers. The FHA has already found out the consequences of expanding their lending programs. FHA loan defaults are now at record levels with 1 in 6 FHA loans in default. There is currently a bill before Congress which is proposing to raise the minimum FHA down payment to 5% as well as eliminating some financed closing costs. The FHA is going broker and it will be forced to cut back lending. When that happens even more buyers will leave the market. The bank bailouts are going to end soon. When they do, the banks are going to dump a large number of foreclosures on the market further dropping real estate prices.

In short, these government "stimulus programs" are doing nothing but propping up prices in the short term with the trade off being more pain in the future. I have been saying for a while now that you can't solve a problem caused by too much debt/leverage with more debt/leverage. It is like trying to solve a hangover with more binge drinking - you might feel better in the short term, but you will feel much worse when you eventually stop drinking. In our case the "alcohol" is actually debt/leverage. I say stop drinking now before there is permanent damage!

James - The permanent damage could be soon...

OCT

2009

Come on, let's keep stealing from our kids, they are too young to know any better, hell we paid money to raise them, let's make them pay our future taxes, it's only fair. Let's keep pumping up prices so realtors can make some more money again. Go NAR Team, Go!

NOV

2009

Alexander Gonta, are we in a recession, because inflation seems to be heading our way. Your post indicates an either/or ~ Perhaps too much money was printed for a recession and now the value is decreasing? Not good for rates.

NOV

2009

NAR Sucks - It isn't just real estate agents that think this is a good idea... Those Congress Critters seem to think so, too... Of course, we aren't the headliners on the debt marquee lately, but it doesn't help to put our hands in the trough, either.

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Lane Bailey - REALTOR & Car Guy

Suwanee, GA

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Diamond Dwellings Realty

Address: 2078 Teron Trace, Suite 250, Dacula, GA, 30019

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