Have you heard about Sen. Johnny Isakson, a Republican from Georgia (and a former real estate professional) who has introduced legislation that would beef up the tax credit that currently exists for first-time home buyers? The news just emerged like a baby chick pecking its way out of its shell and the big idea is to nearly double the tax credit for buying a home this year to $15K AND make it available to anyone buying a primary residence, not just first time homebuyers. Wow.
Why not just make it an even $20K? And while the US Treasury prints another $2 trillion, why not step it up to $50K? The intent is to encourage the step-up buyers to enter the marketplace and start buying homes along with the FTHB that have already flooded the open houses and model homes. Will it work?
Maybe. It's a pretty simple equation. Free money + low rates + cheap houses = More sales. The ultimate variable though is the emotional aspect of buying. The paranthetical components of the above equation are (confidence) and (motivation). Can money really move people to buy homes? Enough of it will. People spend millions on lottery tickets and humiliate themselves by eating sheep brains on TV all in the name of winning the ultimate prize: cash. Isn't a home an even better prize?