Columbia SC $8,000 Homebuyer Tax Credit And The Trickle-Down Effect
I have not been an advocate of this Federal tax credit because I don't believe in government handouts.....receiving tax dollars for doing nothing. But I'm changing my mind.
After completing a recent short sale with Citi Mortgage I began to examine where all this money was put to good use. 
The home buyer used roughly $6,000 of the credit to put toward the down payment and closing costs of the loan. This supplied work for the loan officer, the home appraiser, the underwriter of the loan, and various unforeseen employees at the mortgage company. Included in the closing costs was the work given to the Heating and Air company, the Pest Control company (termite inspection) and the Home Inspector. Associated with each of these are their respective receptionists and accounts payable/receivables personnel.
Work was also supplied to the closing attorney and his staff (paralegal, receptionist, and office personnel) the title insurance company and the Richland County tax office for graciously accepting payment for the transaction.
After the closing the soon-to-be University of South Carolina grad home buyer went to Lowe's and purchased new locks for her house plus buckets of paint and miscellaneous hardware for her new home. She also picked out some nice new appliances and this helped keep store employees employed. The next day two Lowe's delivery men installed the new appliances at the house. This almost took care of the remaining $2,000, but wait....there's more.
Our government has made the filing for the tax credit a little complicated so the buyer went to a tax preparer to complete the 1040X and Form 5405 so she could mail in her amended 2008 Income Tax Return and receive her $8,000 First Time Homebuyer Tax Credit. This gave additional business to both employees of the tax office. Ya gotta love helping the local small business owner.
That's a lot of trickle down that is spread over a wide area of our economy. We can also include the utility companies for supplying power, water and cable services to the home plus the convenience stores for selling everyone involved gasoline for their vehicles and the fast food restaurants for lunches. Everyone listed in this article are benefactors of a single home sale and are our neighbors here in Columbia.
Who would have thought such staggering numbers would be involved in the purchase of a starter home.
I'm quickly changing my mind about this government handout.
Contact me for a current list of homes for sale in the Columbia area
Terry Edwards Russell & Jeffcoat Realtors
tedwards@sc.rr.com www.FeaturedColumbiaHomes.com
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$8,000 Homebuyer Tax Credit And The Trickle-Down Effect
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Good post Terry, but I still go with your first opinion. What I see and hear, is most potential buyers are looking to buy anyway, but might as well take the "free" money while it is being given away. Generally speaking, was the tax credit the only reason the buyer bought the house? since it was a short sale, were they able to buy it below market value (using arms length sale comps, and not REO sale comps)? Maybe they would have bought it anyway without the governments help. Are we as a society supplementing renters into homeowners that really are not ready to purchase, as they don't have sufficient down payment, or reserve cash for emergencies? How many of these transactions are going to go into default in the next few years, only to continue the cycle? Why do we continue to allow 100% or 96.5% financing? Did we not learn anything from the past? I agree, this program is good for residential sales agents and lenders, as every extra sale will help keep them from going in the tank too. Was it fair for the participants of the first tax credit stimulas to make the commitment to purchase, only for the government to continue to give away more into next year. Maybe this could be a permanent credit! I agree with the trickle down, however the utilities is a stretch. With a national debt at almost $25,000 per person now, our grandkids will never get all this pork paid off.