It seems that Realtors and consumers and The Feds are so eager to boost the economy that they believe a variety of stimulus packages will make everything right.
I am not so sure. The Wall Street Journal had an article a few days ago discussing the benefits and drawbacks. As I read it I was wondering if The First Time Home-Buyer Tax Credit program is actually beneficial. Is it just sticking a finger in one part of the dike, only to have water squirting elsewhere.
The Cash for Clunkers Program was a big hit for a while, but it sucked-up demand in the short-run and now very few cars are selling because all the "pregnant" buyers took advantage of the cash-back and there aren't any more.
Wouldn't the free market actually take care of demand?
Read my blog post Buyers on Fire in our new BestHomePro.com blog which discusses contemporary issues in real estate. We would love to have you read and voice your opinions.
Let's say that the first time home buyer's tax credit gets 1,000 homes in Durham and Chapel Hill sell before the end of November. Hurray! But let's then say that because of this, only 50 homes sell to first time buyers per month over the next six months or a year, and that is 50 below the monthly average. Are we really any better off?
At some point in time there has to be real demand, not contrived demand. I am not saying that stimulus is not necessary, but someone has to pay for stimulus or we allow the natural order of supply and demand to rule.
Your thoughts are more than welcome.
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The government is at least partly responsible for the mess we are in by encouraging the banks to lend to people who could not afford the mortgage they applied for. No money down loans, no doc loans etc. Now the government is trying to fix the problem but will probably create more problems. The biggest issue in the housing market right now in my opinion is that many people do not have a job or are unsure if they will have a job in the near future. That is a big drawback to getting a mortgage and buying a home. Others that may have considered buying a second home have lost substantial wealth in their investments and are reluctant to make a move until things improve.