Should the $8,000 tax credit be saved and extended?

By
Real Estate Broker/Owner with Respect Realty LLC 200311024

$8,000 tax credit extensionAwhile back I wrote why I thought the $8,000 tax credit was a bad idea. Now here we are coming up on the November 30th dead line and no one is sure what December 1st holds for the housing market, but a lot of real estate agents are nervous and I’m one of them.

This $8,000 tax credit created a false housing market, including increases in buying and prices over the past couple months. But what happens when these buyers are gone? We are left with a completely dead real estate market. (In my opinion)

So, now that things are already screwed up and we are possibly headed for another little crash in the real estate market and we are left looking for answers. I’m going to look at our pets for answers. If you have ever had a dog, cat, or in our case a pig, you know that you can’t take them away from their mothers too quickly. (That is what will happen on December 1st, 2009.) First time home buyers will be pulled out of the market way too early.

Now, what if we were to wean them away from the tax credit like you do a pet from their mother? Maybe offer $7,000 if close before January 1st and then lower than amount over time until we reach no tax credit at all. Maybe then the housing market could slowly drop, rather than take a complete fall on December 1st.

If by the time we have weaned the first time homebuyer off the tax credit our economy hopefully will have picked up enough that regular buyers will be ready to buy again and investors will be out purchasing homes again.

Even though I disagree with the tax credit in general,we need to think of something to help the housing market continue beyond December 1st, 2009. Since they already started this mess, maybe our government should look for ways to fix it or maybe just let it take its natural course and in a couple years, it will recover on its own.

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Rainmaker
592,907
William J. Archambault, Jr.
The Real Estate Investment Institute - Houston, TX

Todd,

Lets just say no!

I'd suggest:

Guarantee the deducktablaty of mortgage interest for the life of the loans,

Put the deduction on the 1040 instead of form "A" extending it to the lowest income tax payers.

Bill

Sep 12, 2009 04:33 PM #1
Rainmaker
248,047
Matt Grohe
RE/MAX Concepts - Des Moines, IA
Serving the metro since 2003

Todd; I'm all for extending the credit. It's been a boon to this market with a ripple effect all through the economy. A great investment in the nation.

Sep 12, 2009 04:44 PM #2
Ambassador
997,247
Steve Shatsky
Dallas, TX

Hi Todd... I am so torn on this issue.  I agree with everything that Matt mentions in the comment above mine, but I can't help thinking that we can only "prime the pump" for so long and at some point the market needs to be self sustaining.  Ugh... now I have a headache just thinking about this.

Sep 12, 2009 05:57 PM #3
Rainer
138,317
George & Arlene Paukert
Road to Wealth, Inc. - West Palm Beach, FL

There is no way this should be extended! I think the government just needs the economy and "PRIVATE" business fix the problem and then the economy can finally get back on track.

Sep 12, 2009 09:59 PM #4
Rainer
65,622
Dan Callahan
Callahan's Home Inspections - Casper, WY

I think it should be extended and should include all homebuyers. I believe a lot of second and third time homebuyers are out there and are waiting for them to be included in this tax break!

Sep 13, 2009 01:49 AM #5
Rainmaker
372,940
Judy Jennings
The Green Company - Ashland, MA
Broker - The Lanterns at Warren Woods - Ashland MA

Todd - I like the idea of the gradual reduction to the tax credit until it is no longer available. A total cut off on Dec 1st will have an impact at a time when the market in our area has a normal lull. We need to keep that inventory moving.

Sep 13, 2009 04:22 AM #6
Rainmaker
317,100
Liz Loadholt
Liz Loadholt- AgentOwned Realty- Covering SC - Mount Pleasant, SC
Realtor--Broker-in-charge - Trainer--Relocation Director Covering SC

Todd --- I am so torn over this issue -- one part of me wants it to be extended and the other says NO -- I think we need it to be able to keep real estate sales up.



                  Mama  Liz

Sep 13, 2009 07:51 AM #7
Rainmaker
317,100
Liz Loadholt
Liz Loadholt- AgentOwned Realty- Covering SC - Mount Pleasant, SC
Realtor--Broker-in-charge - Trainer--Relocation Director Covering SC

Todd --- I am so torn over this issue -- one part of me wants it to be extended and the other says NO -- I think we need it to be able to keep real estate sales up.



                  Mama  Liz

Sep 13, 2009 07:52 AM #8
Rainmaker
596,993
Jim Hale
ACTIONAGENTS.NET - Eugene, OR
Eugene Oregon's Best Home Search Website

I'm not torn.  Just extend. Do not expand. This credit has been a boon -- the only thing the government has done that has really had an impact.

Sep 13, 2009 11:18 AM #9
Rainmaker
76,436
Bridget Cella
Re/Max Connection - Sewell, NJ
e-Pro, Realtor

Some nice responses so far.  I don't think naything should be done until after the November expiration date - let's get people off the fence now.  Then maybe in the spring or summer or next fall put something back into place.  With the pending hope of something coming, people are wanting to wait.

Sep 13, 2009 03:17 PM #10
Rainer
229,238
Ryan Shaughnessy
PREA Signature Realty - www.preasignaturerealty.com - Saint Louis, MO
Broker/Attorney - Your Lafayette Square Real Estate Partner

Todd - I have a pretty simple solution - either end it or continue it permanently.  It has created a false bubble in the market that isn't based on market conditions.  The one thing that creates instability in the market is the government constantly changing the rules of the game.

Sep 13, 2009 06:36 PM #11
Ambassador
890,930
Lane Bailey
Century 21 Results Realty - Suwanee, GA
Realtor & Car Guy

I know that the tax credit is good for my business... but at the same time, we have to stop sending these bills to our kids and grandkids to be paid. 

Sep 15, 2009 12:02 PM #12
Rainer
30,756
Art Marine
Mortgage Solutions Financial - Lake Oswego, OR
Loans that Fit your Life

Hi Todd,

I am with Dan on this one.  This program is working and it needs to be extended not ended.  Eventually we will see price stabilzation and that would be the time to phase it out. 

Sep 17, 2009 10:49 AM #13
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