I know many of you were disappointed by the recent results (as far as they are known) with the massive Obama Stimulus Package for a number of reason (see Lenn's excellent posts on the details). Of particular concern to Realtors was the push by NAR & CAR for us to contact our legislators and encourage them to vote for this measure when many of us felt it was not in either our best interest or the best interest of our country. The carrot often mentioned was the inclusion of the $15,000 home buyer tax credit that was widely anticipated to jump-start our nascent housing market and provide a true stimulus.
Given that motive, many of us held our noses and encouraged passage of a responsible stimulus package that eliminated the pork, the excesses, the waste and contained real provision for economic stimulus. Many of us understand that the collapse of the housing industry precipitated the wider declines in our economy and only by stimulating housing and jobs would we climb back out. Clearly that was not the prevalent sentiment among the Democrats (and 3 Republicans) in DC.
I've been awaiting the spin doctors at NAR to put a bright smiley face on this pig and here it is. President McMillans points are valid as far as they go. What is not addressed is the massive waste, the barrels of pork, the true lack of stimulus and the long-term cost to you and me that this bill will produce. Apparently even the large amounts of cash handed out by NAR was not enough to carry the day against the forces of greed, avarice, gluttony and corruption we are seeing played out in our nations capitol. It's a sad day.
Here's our take on the Stimulis Bill and Treasury announcements made this week. We look at the Stimulis package AND the Treasury's package holistically, in compliment with each other - mostly because that's how the Obama team is looking at it. Your representatives, the NAR Board of Directors, asked us in November to do 4 things (with an unspoken but clearly understood mandate to PRESERVE what we already have). Here they are: 1) get loan limits raised for high cost areas, 2) make the $7,500 tax credit NOT a loan, 3) try to find ways to push interest rates down (which are higher than they should be due to systemic risk right now) by 200 basis points, and 4) help provide solutions to the foreclosure/short sale problem.
So here's what we have achieved: 1) the loan limits will be raised to $727,000 in high cost areas, 2) the tax credit will be raised to $8,000 with NO payback [a true credit], 3) interest rates have come down 125-150 basis points, and 4) the bill has over $50 billion in it for foreclosure mitigation, with Geitners Treasury plan signaling that the second half of TARP and TALF will be used to mitigate foreclosures through a government guarantee, drive down interest rates by buying another $200-300 billion of mortgage paper from the GSES's thereby freeing them up to do the same with new mortgages, and Fannie has just agreed to lift the cap of 4 investment properties eligible for loans and raise it to 10.
In addition, we preserved what we have - which some tend to forget is always on the table when these negotiations start up again - mortgage interest deductability, real estate tax deductability, and the $250,000/$500,000 cap gains exclusion (an overall package worth more than $100 billion and for some a very attractive funding source for their pet projects).
We did make a run at the $15,000 credit -- and we would have loved to have gotten that or the Homebuilders $22,000 credit idea as well as their 5 year loss carryback deal, but they were considered too rich for this program. What it did do though is totally take the debate off of whether a tax credit should be reinstated at all (it expired last year) and whether it was a true credit or a repayable loan, and kept the conversation on how much it should be. It also kept the debate off of 'what we are willing to give up to get a $15,000 tax credit' and kept the debate again, on how much it should be. It's pretty hard to complain when they give you what you ask for and you lose something you never had.
Of course that's just my opinion. I could be wrong.