The Press is on...

Real Estate Agent with Century 21 Results Realty

I have recieved emails this morning from the NAR and from my local association regarding the $8,000 First Time Home Buyer Tax Credit.  There is a full court press from the National Association of Realtors as well as the local associations to not only continue, but expand this program.  And there is NO doubt that the program has been effective, especially in the last few weeks.  Entry level home sales are up. 

But, honestly... it needs to end as scheduled. 

But it is helping my business...

I can hear some of my real estate agent friends saying that very thing.  That is the basis of why the NAR wants to continue the program...  But, we really need to examine the long term implications of what we are doing.  NOT paying attention to the long term implications of current actions are what made this problem to begin with... 

Whether you think that the bubble was caused by the Community Reinvestment Act, Fannie and Freddie pushing for lower and lower barrier to home ownership, out of control credit markets or even just people buying more home than they could afford... thinking that they could always bail out for more money... it is obvious that nobody had their eyes on the future. 

And there is an solid fact... the market is going to find its bottom, and then begin recovery.  No matter how the government intervenes, the market HAS to find a REAL bottom... a place where people look at their situation, and see that homes look like a deal and they feel like it is time to jump. 

Many think that the initial $8,000 FTHBTC short circuited the process and gave the market a bottom.  But, there are some economists that think the bottom was happening anyway... others think that prices may go down after the tax credit expires. 

If prices may go down when the tax credit expires... we need to keep it!

Newsflash.  If we aren't at the bottom, and prossibly even if we were, prices will likely go down when the tax credit expires.  Demand has been juiced in the last few weeks because of the immediacy of the tax credit expiring.  That has eaten a little of the supply and buoyed prices.  If the Tax Credit is extended, the immediacy goes away and demand will slacken again.  If the tax credit goes away, the demand will still slacken.  The difference is that our children and grandchildren won't be left with yet another bill from the government. 

But, what happens when the demand weakens and prices start to drop?  Gee... I don't know...  what happens when the store runs a sale and you can get that flat screen you've been looking at for the last 3 months?  If you have a little money saved up, you go buy it.  That is the market working. 

Prices will drop, and people will buy properties that seem like good deals to them.  A few buyers in the market will see properties that they have been eying getting snapped up before they respond... and the market will start its recovery

The Home Buyer Tax Credit is a stalling tactic...

That's all.  It doesn't create recovery, it spurs demand from the people that were on the fence... but we need a constant stream of people coming OVER the fence.  The ONLY way to do that is to make people comfortable with their jobs and with the family finances.  The economy needs to begin recovery for that.  Adding more deficit spending isn't going to do that...  That actually hurts, because it places a restriction on credit availability... subject for a different blog post...

The bottom line is that housing has to recovery naturally.  Yes, real estate agents have been helped by the program, but it is our kids that will get the bill for that help.  We need to call a stop to this before it gets more out of hand.

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  1. Robin Rogers 09/15/2009 07:07 AM
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Roland Woodworth
Q Realty - Clarksville, TN
Q Realty - Power In Real Estate

Lane.... I think this should be continues and available to all home buyers. Some areas of the country need this more than other areas. I see your point, but have to say I would support the extention of the tax credit.

Sep 15, 2009 04:16 PM #10
Jeff Belonger
Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ
The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans

Lane...   very well done and very well said...  From day one, I have been mostly against this, because of the short term and long term ramifications, that so many, even our gov't, have ignored. Yes, it has helped... but we need to allow this to happen naturally. You mentioned several reasons what got us in this mess, and I think one of the biggest was the gov't forcing Fannie and Freddie's hands to extend financing to more people than it should... with no money down and much higher income ratios. 

Overall, most of my buyers this year where planning on buying anyhow... it was just nice to get the $8,000 on top of this...  would I like to see this continued? Yes, but no... and I agree, it just needs to stop. Now, what would really tick me off is if they continued it, but by raising the limit to $15,000.  If this happened, how about all politicians giving up their lifetime health care and pensions?  Okay, maybe not give it up, but have to sacrifice a certain percentage. We will suffer, they won't, because they are protected... that really ticks me off.

jeff belonger

Sep 15, 2009 04:26 PM #11
Christine Donovan
Donovan Blatt Realty - Costa Mesa, CA
Broker/Attorney 714-319-9751 DRE01267479 - Costa M

I'm torn about this.  It has been good for business, and I also see the flip side of potentially extending the agony of the recovery.

Sep 15, 2009 04:35 PM #12
Jeff Belonger
Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ
The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans


PS... Jessica...  why aren't there as many comments on Lane's post, as opposed to Loreena Yeo's post?  Because many realtors look at their pay check.. yes, many loan officers do also... but they look at now, not the future. This will hurt us in some time period...  aren't we in debt enough?  Is this helping the true recovery?  Many experts say no, as I have said also.  But we are Americans... we need that quick fix now, not later... even if later will be worse. 

Here is my overall problem and I might lose some fans or supporters... but I have found many on AR to comment on those blogs that sound warm and fuzzy, without truly thinking out the repercussions. I could name one blogger on here that writes that kind of stuff, in more cases to get comments and to be popular... yet if you really pick apart the blogs, a lot of it is fluff and this author has even admitted this to me on several occasions.  Sad, but true. We need to think things out, and not just do it because it sounds good or feels good now.  Just my .02.

jeff belonger

Sep 15, 2009 04:35 PM #13
David Dee
RMX REALTY - Alhambra, CA
Real Estate - San Gabriel Valley (L.A.) & N. Orang

From the desk of David Dee,


That is a different perspective. I believe that the 8k Tax Credit has helped stimulate the economy as it provided the kick to get buyers off the fence. However, there comes a time when things will have to happen naturally.

Sep 15, 2009 07:08 PM #14
Linda Metallo DiBenardo
RE/MAX Impact, Lockport, Illinois - Lockport, IL


I agree, it's a stalling tactic, just a band-aid.  Natural supply and demand is what a "market" is.

Also so far how is the government doing with social security, medicare, the post office, the war on poverty, etc, etc. 

Linda Metallo, Re/max Impact, Lockport, Il.

Sep 15, 2009 11:16 PM #15
Missy Caulk
Missy Caulk TEAM - Ann Arbor, MI
Savvy Realtor - Ann Arbor Real Estate

Lane, I agree. First time home buyers in my market were going to buy anyway. First time homebuyers have always dominated the market. Did it get some buyers off the fence? Yes it did. But, if it had not been offerered in the first place it most First Time Buyers would have bought anyway. Bravo!

Sep 15, 2009 11:49 PM #16
Matt Stigliano
Kimberly Howell Properties (210) 646-HOME - San Antonio, TX

Lane - I just wish someone would make up their mind about it and stop saying "we're talking about..." and that "we might do..."  The speculation over all of this has been way too much.  NAR should have been pushing (if they wanted to push) long before now (and I'm sure they were, but just not as publicly) to make this a reality in order to avoid what I feel is going to be people hanging on for the hope over the next month and a half.  If it doesn't happen, there will be a lot of regret, if it does, there will be a lot of "I told you so" passed around.  Will be interesting to see the outcome.

Sep 16, 2009 12:30 AM #17
Dave Edwards
Dave Edwards Realty - Greenville, SC

This tax credit needs to end. I also don't like it how NAR is "representing" us by telling everyone that we want the credit extended. 

Sep 16, 2009 01:05 AM #18
Robin Rogers
Robin Rogers, Silverbridge Realty, San Antonio, Texas - San Antonio, TX
CRS, TRC, MRP - Real Estate Investment Adviser

Hi, Lane:

I agree with you, which is why I reblogged your post immediately. I hope other people will see it and think twice about jumping on NAR's bandwagon. It is self-serving.




Sep 16, 2009 01:31 AM #19
Gene perez
Greater Mortgage Solutions & Valley Hills Realty - Santa Maria, CA

boy this is really going to start to be a hot topic but I am full agreement it needs to end you had your chance I want business to recover all the handouts need to eventually stop

Sep 16, 2009 01:54 AM #20
Paul McFadden
Paratex - Seattle, WA
Pest Control, Seattle, WA.

Lane: Thanks for the post. Eventually the credit will probably end. I expect it to be extended in some form past December 1 but I think you're right. We will soon get to a more normal market. It may not be until Summer 2010 at the earliest but we will welcome it nonetheless. It's been a rough ride for a lot of us. Thanks again!

Sep 16, 2009 03:20 AM #21
Joe Pryor
The Virtual Real Estate Team - Oklahoma City, OK
REALTOR® - Oklahoma Investment Properties

My business does not target people who do the tax credit. It is geared to investors, and my short sale team. It would be in my best interest to see no new tax credits. If prices and demand go down especially as we approach 10% unemployment nationwide, I will benefit. So I am torn. Do I care that I believe that the housing industry is still fragile and needs stimulus? Or should i take a self-interest point of view? Stay tuned.

Sep 16, 2009 06:51 AM #22
Team Honeycutt
Allen Tate - Concord, NC

There have been a lot of interesting and varying opinions about the tax credit on AR today.  Lot's of food for thought.


Sep 16, 2009 07:54 AM #23
Matt Yogerst
RE/MAX Realty 100 - Menomonee Falls, WI
Metro Milwaukee Real Estate

So the market is stll fragile... fine.

So the market could go down... fine.

So the market could .... FINE.

I agree with you 100%. We just had our company meeting with a hearty applause when they announced that the new bill should be going through. Yes, it is good for the current paycheck status, but people never look at the bigger picture. No government stimulus is needed. All it does is float todays economy part time while flipping the bill to future generations (like me). Just let the bubble burst!!! Let it correct itself. Let people actually LEARN that things just are not so rosy and peachy keen. The sooner we remove these excess programs from our ever bulging tax bills, the sooner we can move forward.

Also.... think on this - Would a first time buyer be better served buying a 100k house and getting a 8k credit, or being able to buy that same house for 85k? Sooooo many MORE buyers would be able to get a house at more realistic prices.

Sep 16, 2009 09:55 AM #25
Lane Bailey
Century 21 Results Realty - Suwanee, GA
Realtor & Car Guy

Thank you all for the comments.  Remember that agreement is NOT a requirement on my blog.  I welcome dissenting opinions. 

Matt - I don't know that prices are out of line in my market... but there may be people thinking that a better deal might come along with respect to freebies from our Uncle...

Joe - The tax credit IS helping some of my segment... but I still think that it needs to end.

Sep 16, 2009 01:38 PM #26
Chris Olsen
Olsen Ziegler Realty - Cleveland, OH
Broker Owner Cleveland Ohio Real Estate

Hi Lane -- I totally agree, just like the cash for clunkers program.  Let the market right itself, no matter how painful (for all of us).

Sep 16, 2009 02:34 PM #27
James Lyon
Vista Pacific Realty - Sacramento, CA

I agree as well, it will be interesting to see what happens.

Sep 16, 2009 05:00 PM #28
Eric Anderson
Eric Anderson Realty Group - Fayetteville, NC
Fort Bragg Military Relocation Services, Fayettevi

Good Post Lane. I actually believe the credit should be extended for all Home Buyers.  We have always heard the sky is falling, were leaving all this debt for our children.  It's simply an economic cycle, just as we had a budget surplus at the end of the 90's and went in to a massive deficit.  It's simply a cycle and the Tax Credit provides a band-aid to get us through this cycle. 

Sep 16, 2009 05:00 PM #29
Lane Bailey
Century 21 Results Realty - Suwanee, GA
Realtor & Car Guy

Eric - Actually... no we didn't.  Clinton never actually produced a surplus, unless you don't count all of his spending.  Furthermore, we were IN  a recession at the end of the clinton Presidency.  But at the end of the Clinton Presidency, we were almost $6T in debt.  Now we are almost $12T in debt ($10T last year).  Just like with your household debt, at some point the intrest gets unsupportable... and we are just about there. 

Trying to fool the market doesn't work.  And we are about to have a reality check... but even if we continue the credit, it will cease to help the housing market.  There is no immediacy if the credit continues.

Sep 17, 2009 02:43 AM #30
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