NAR makes call to action to extend the $8000 home buyer tax credit - good or bad?

By
Real Estate Agent with Sand Dollar Realty Group, Inc. BK627826

The National Association of Realtors issued a call to action today to contact your Senators and Congressmen about extending the deadline on the $8,000 home buyer tax credit.  Click the link above and you can see NAR's video on this subject.

capitol building 

While I am glad that the tax credit has probably helped stimulate the real estate market and the economy some, I also wonder about the longer-term effects of this so-called "stimulus" money on this nation's deficit and national debt. 

I would rather see the money in the hands of the people as opposed to Wall Street fat cats or failing banks though.  However I also hear stories on the news and elsewhere of people using the $8,000 to pay for frivolous items.  Kind of a windfall shopping spree. I also don't like mortgaging the future of this country by giving free money to people while increasing massive debt that may end up crushing our nation one day (if it hasn't already).  Kind of "socialized" real estate buying if you can call it that. Take from my pocket and put it in yours.

I did some quick research in our Mid-Florida Regional MLS system which covers portions of some 14 counties surrounding Orlando and Tampa.  Of 55,500 sales since 12/1/2008, some 23,594 (42.5%) sold for all cash.  Which means some 31,906 (57.5%) sold for some type of financing terms.  I am assuming that most of the cash buyers are investors who won't be getting the tax credit, while most of the financed buyers are owner occupants many of which will be getting the tax credit. I'm not sure exactly what these numbers mean though.  However it does show that many people are buying regardless of whether they are getting the $8,000 tax credit. Personally I bought an investment property earlier this year and didn't get a government check out of it.

So what's your take on extending the tax credit?  Is that a good thing? Or should the government simply butt out and stop meddling with the economy? I haven't made up my mind, but overall I tend to be against most government programs that involve spending my tax dollars on items that aren't prescribed specifically in the Constitution.

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Re-Blogged 4 times:

Re-Blogged By Re-Blogged At
  1. Chris Brown- Florida Home Loan Specialist | Certified Mortgage Planner 09/16/2009 01:20 AM
  2. Paul Silver 09/16/2009 02:44 AM
  3. William Staney 09/16/2009 04:05 AM
  4. Ben Huynh 09/16/2009 10:56 AM
  5. Brian Gibbons 09/16/2009 12:03 PM
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Anonymous
synthia noble

I work in the south chicagoland market and we were VERY slow until just this month.  The tax credit is getting first time buyer's off the fence.  I am all for the tax credit because I can actually pay my bills this month.  I prefer the tax credit not be extended.  Definitely not until after the deadline.  I liked another post that suggested revisiting the issue first quarter of 2010.  I definitely do not see a point in increasing the amount - actually $5,000 would still motivate people. 

Sep 16, 2009 06:28 AM #69
Rainer
30,353
matt mathews
mathews Realty Group - Yucaipa, CA

Please no more bailouts!!!  This last Credit has cost $15billion-that's more than twice the amount that was projected when Congress passed the stimulas bill back in February.  Let the market settle down for a while. I argue the fact that most of that money is going to people who would have bought a home anyway.  Is this really the best way to spend money we don't have???  Contrary to public belief, many Investors ARE getting the Tax credit.  I could tell you stories all day long how they are doing it! I don't care to participate-Thank you very much.  I know we all want to make aliving but all this is doing is robbing our own bank accounts.  GIMME! GIMME! GIMME!-  WHEN IS GOING TO STOP???????????????????????????? 

Sep 16, 2009 07:27 AM #70
Rainmaker
52,677
Tim Brown
RE/MAX Corridor - Schertz, TX
Broker, ABR, GRI, SRES, TRLP

We are a confused society, yet America still manages to grow. We ask for affordable housing for everyone, then find out that not everyone will work to keep it up and make payments. We ask for dependable cars that last for years, then wonder why the auto industry is laying people off when sales go down. We ask for longer lasting technology and wonder why technology companies aren't making huge profits when we keep our computers for five or more years now.

The $8000 credit is a distraction to buyers that maybe should be saving for a home instead of running out to meet a deadline to "cash in" on the credit. As many above state, when there is involvement and personal contribution to the sale, the owner will tend to take a little more pride and try to keep their investment up and look forward to the long term.

Government has also made walking away and foreclosure too easy for borrowers across the board. Now they can walk away, blame the company that laid them off, and get another loan in 2-3 years. It is insane, where is the motivation? And we blame the banks????

But, somehow Americans continue to progress and will eventually move on to another crisis. Hey, did you know we are at war? We have an all volunteer military (and CIA, FBI, etc) and they are keeping the bad guys out of America (for now anyway).

Sep 16, 2009 07:38 AM #71
Rainer
14,701
Sue Robertson
RE/MAX Executive Realty - Mooresville, NC

It is working for me! I recently sold a home to a 1st time buyer. Then The sellers moved up to a larger home worth $100,000 more! I like the bubble up economics rather than the trickle down!

Almost all my buyers are getting some or all of the $8000. So as a Realtor I want to keep it. As a tax paying citizen, I think we should phase it out over the next year. Maybe reduce it some each month till it is gone.

Sep 16, 2009 08:05 AM #72
Rainer
20,976
J.T. Thomas
American Horizon Real Estate - Springfield, MO

Extend it! In our market (Which is a smaller market), Buyers are just now becoming familiar with it. We do not have any form of television or print advertising (Govt. sponsored) alerting home buyers that this is something a lot of them can take advantage of. The responsibility of getting this out has been on the shoulders of local Realtors, lenders, etc. Extension of the tax credit will have a positive impact on our market and others across the nation.

Sep 16, 2009 08:06 AM #73
Anonymous
Simone StClare

How about all of you who live in the non ridiculously high cost-of-living areas (such as the SF Bay Area, where I live and sell real estate) give your area's share of the $8000 per first time buyer to us?

Even though prices have dropped and the median affordability index has improved, my client's reality is still that it is difficult to qualify for a first home. Along with very low inventory in the under $300,000 price range (yep, you read that right: $300k is low for us!) and multiple offers on everything that is not a short sale, our efforts to beat the Nov. 30 deadline is making for tired, frustrated and discouraged would-be buyers and agents.

I'm not surprised that 42.5% of all sales in Rob's area of Florida were all cash. How do you think the investors are competing with owner-occupant buyers? Banks are taking all cash deals from investors in favor of financed deals from owner-occupants. So, absentee owners are supposed to revitalize all the blighted neighborhoods? Don't make me laugh!

Hey, if things were really "fair" or "made economic sense", the tax credit would have been indexed to rise or fall with the median price range of an area. If the intent of the bill was truly to inject some activity into the market, why limit buyers in California to an amount that goes only 1/3 as far as for a buyer in Mississippi?

As far as the $8000 being spent on frivolous items, I think whoever believes that theory isn't really looking at the homes being purchased. Most of these homes are foreclosures that have been abused and neglected. The $8000 is being earmarked for improvements such as carpeting, new roof, replacing landscaping, etc. Isn't the point of the credit to stimulate the economy? Buyers are doing just that by improving their new homes and purchasing goods and services that are part of the overall "housing marketplace".

My vote is to leave the tax credit alone. If we can't do that, then perhaps we can make it even better by enlarging the scope to give buyers in high-cost areas a more fair percentage of assistance.  Hey; with our changing weather patterns, there just might be a cold day in hell, doncha' think?

Sep 16, 2009 09:12 AM #74
Rainmaker
135,600
Paul Francis
Francis Group Real Estate - Las Vegas, NV
Las Vegas Real Estate Agent - Summerlin Homes

DISGUSTING!!!

The National Deficit is already out of control... THIS IS NOT FREE MONEY...

The NAR video of Pandering REALTORS is an absolute TRAVESTY for  the profession and EMBARRASSING.

Housing (and the economy) will recover when Prices are where they should be before ALL of the TAMPERING by artificially LOW Interest Rates / LAX LENDING STANDARDS that created the Real Estate bubble / Homes used as an ATM machine.

Have we not Learned ANYTHING??

No Wonder Real Estate Agents are right above Used Car Salesman when it comes to Opinions of Professions by the public...

DO WE HAVE NO PRINCIPLES???

 

 

 

Sep 16, 2009 09:18 AM #75
Rainer
16,008
Brian Gibbons
REISkills.com - Los Angeles, CA
Creative Financing Coach All 50 States

Hi Rob:

From the IRS website:

Q. Can a taxpayer claim the first-time homebuyer credit if the purchase is pursuant to a seller financing arrangement (for example, a contract for deed, installment land sale contract, or long-term land contract), and the seller retains legal title to secure the taxpayer's payment obligations? A. If the taxpayer obtains the "benefits and burdens" of ownership of a residence in a seller financing arrangement, then the taxpayer can claim the credit even though the seller retains legal title. Factors that indicate that a taxpayer has the benefits and burdens of ownership include: 1. the right of possession, 2. the right to obtain legal title upon full payment of the purchase price, 3. the right to construct improvements, 4. the obligation to pay property taxes, 5. the risk of loss, 6. the responsibility to insure the property and 7. the duty to maintain the property. (New 7/2/09)

I love creative financing to buy and to sell. 

See http://www.irs.gov/newsroom/article/0,,id=206291,00.html

 

Sep 16, 2009 11:52 AM #76
Rainer
16,008
Brian Gibbons
REISkills.com - Los Angeles, CA
Creative Financing Coach All 50 States

And, for folks wanting to inform Buyers and Sellers of Installment Sale Taxation, see

Publication 537 (2008), Installment Sales ... An installment sale is a sale of property where you receive ... If a sale qualifies as an installment sale, the gain must be reported ... Adjusted Basis and Installment Sale Income (Gain on Sale) ... http://www.irs.gov/publications/p537/ar02.html - 368.4KB

Sep 16, 2009 11:55 AM #77
Rainmaker
1,010,446
Rob Arnold
Sand Dollar Realty Group, Inc. - Altamonte Springs, FL
Metro Orlando Full Service - Investor Friendly & F

Wow, I'm overwhelmed by all the responses.  This is a lot to ponder.  Regardless, buyers need to know that if they don't have their property under contract by mid-October then odds are that they will miss the deadline for the $8K.

Sep 16, 2009 12:06 PM #78
Rainmaker
125,473
Susanne Novak, ABR, FIS, GRI
RE/MAX 24/7 - Columbus, OH

I agree that the notion of receiving $8,000 from the government has gotten many first time buyers off the fence. Heck, 90% of my business is first timers, and now, that the deadline looms on the horizon, they get nervous and worry that they could be missing out on the benefit.

I also admit that I love the business opportunity this $8,000 carrot offers to the real estate industry.

What I don't like is that we have somebody messing with everything. Bail-out here, bail-out there, companies counting on and demanding "free" money ... is this the essence of capitalism? I don't think so. I have to agree with Paul Francis - do we have no principles???

Sep 16, 2009 01:32 PM #79
Rainer
31,610
Linda Landry
HomeSmart Realty - Tucson, AZ

Hi Rob; good post; looks like you covered all sides of the coin and stirred the pot.  I agree with the points made on market stabilization and the government hands off.  However, I also agree the the taxpayers have benefited the least in the bail outs.  Therefore, I would like to see a NEW tax credit offered around the middle of February up to $15k for dual purchasers of one property and $7,5k for single purchasers NOT just first time home buyers.  The reason I chose those numbers was to prevent the first time home buyer who did jump into the market in '09 from feeling mislead if the tax credit was larger the second time around.

Sep 16, 2009 01:33 PM #80
Rainmaker
199,540
Mark Velasco
Sharpstone Realty, Inc - Whittier, CA
Listing Agent-Whittier & Surrounding ciities

I think that the $8,000 is a necessary evil to get the RE market back on it's feet. So far it has worked.

Sep 16, 2009 05:07 PM #81
Ambassador
2,734,902
Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

They just cannot keep their mouths shut about anything.

Why not let it expire, get the data next tax season and see how many first time buyers got the credit and how much it cost. 

All this announcement will do is keep many on the fence longer waiting for prices to come down. 

 

Sep 16, 2009 09:04 PM #82
Rainmaker
131,417
Mike Henderson
Your complete source for buying HUD homes - Littleton, CO
HUD Home Hub - 303-949-5848

Wow I was incredibly impressed with the blog and the comments.  I have seen several good ideas.  What I was completely suprised with I would of guess it would be 66-75% in favor of the credit.  It looked to me like it was 75% against extending it.

By the way I think it would be a good idea to extend it.  If someone can mention a better program than the $8,000 tax credit then I want to know what is it?  It can be a credit, or an expense.  Sure it would be great to have a flat tax, reduced marginal corporate rates, etc.  But let's talk about what they are actually doing.

Sep 16, 2009 10:01 PM #83
Rainer
133,735
TERRY DRISCOLL
MAINE HOME REALTY - Bath, ME
REALTOR - Buy or Sell in Any Season!

Like most everyone here, I'm torn about this also - - it's the duality of being a REALTOR vs. a TAXPAYER.   I think the current credit has worked to reduce inventory - - to a certain extent.  In our market, we still have many very attractive short sale properties, priced well within first-time home buyer reach, but they have been passed over because there was, and is, no guarantee that they could close before the looming deadline of 11-20-09 (I heard this as early as June) - - even though they'd be getting a great deal, buyers wanted an even better one!  In our market, we also have to contend with the additional inventory "dump" that the impending closure of Brunswick Naval Air Station is causing as navy personnel are re-assigned.  Many of these homes are perfect for first-time buyers, however, the sellers aren't moving up, they are moving to Jacksonville!  The market we need to stimulate here is for the $200K and up homes - -in our area, this is not first-time home-buyer territory.  I think the way the new bill is written, it is for a $15K tax credit and it is extended to all buyers, not just 1st timers.  As a REALTOR, I say "great, we need that" but as a taxpayer, I say you are going to give alot of people a free $15K who would have bought anyway because they needed to, not because they were stimulated by a tax credit.  Others have suggested there be a gap between the expiration of the $8K credit and whatever the new credit will be.  I think that just guarantees an almost complete stoppage of sales during the gap period.   Do you remember how people who got the $7500 credit (that you had to pay back) were upset they didn't wait for the $8K!  Once you start this kind of thing, people think they are ENTITLED!  Then what? 

Sep 17, 2009 12:08 AM #84
Rainmaker
135,600
Paul Francis
Francis Group Real Estate - Las Vegas, NV
Las Vegas Real Estate Agent - Summerlin Homes

ENTITLED is becoming the key word here....

Somebody buying because they need $8,000 may be buying for the wrong reasons. There are several people waiting for the tax credit to expire since they feel prices will come down even further... and they may be right.

Do we keep the tax credit going forever?

Long lasting recovery begins when people buy because of the price and are financially sound to do so... not because of a cash back giveaway.

By the way... the money does come from somewhere...

http://www.usdebtclock.org/

Current Liability per U.S. Citizen for all obligations as of today is $192,211 ....

The true cost of the Government Bailouts is pushing $12,000,000,000 in liabilities... or.... $40,000 for each and every U.S. Citizen. (Feel free to check my math... there are so many zeroes there..)

Let me know where those trees are that are growing the money...

Pay now or pay later... either way it has to be paid in one form or another.

 

 

 

 

 

 

 

Sep 17, 2009 10:16 AM #85
Rainer
31,350
George Wilson
Lincolnton, NC - Lincolnton, NC

Hi Rob. You must be reading my mind. As a REALTOR, I'm for the tax credit as it has helped some of my buyers but some it didn't as they are upsizing or downsizing. As a taxpayer I don't like it adding to the national debt but if Congress in their infinite wisdom are going to give out the money I would rather it be given to Joe Public than to the financial, health care, unions & others who spend billions $'s wooing our elected officials to get taxpayer handouts to maintain the status quo and then years down the line we're right back here again (I heard over the weekend that Wall Street is again bundling exotic loans & making risky investments). That's my 2 cents (oops deflation make that 0.5)

Sep 19, 2009 06:45 PM #86
Rainer
44,496
Dave Hymes
RE/MAX Gold - Placerville, CA

Rob, I don't see the tax credit as a stimulus for the most part. A large percentage of the credit isn't a handout from the government, it's a home buyer's money that the government never receives, which I think is a good thing. It's not at all like giving money to banks or Wall Street. Now if they wanted to allow a home buyer to receive a credit totaling $8000 spread over three years, or however long it takes, to use the entire credit that might be better then the government sending homebuyers a check for the unused portion of the credit. Bottom line, just about anything that allows taxpayers to keep more of their own money I'm in favor of.

Sep 21, 2009 05:36 AM #87
Rainmaker
1,607,549
Charles Stallions Real Estate Services
Charles Stallions Real Estate Services Inc - Gulf Breeze, FL
Buyers Agent 800-309-3414 Pace and Gulf Breeze,Fl.

I truely think like Cash For Clunkers, it just moves future sells to this quarter. Truly would you buy a home thinking the Government is going to give you $8000. off your taxes. I want the money now, so if I was going to buy a home it wouldn't matter either way. But that is me and of course everyone else is entitled to their opinion no matter how wrong they are. :)

Nov 08, 2009 12:17 AM #88
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Rob Arnold

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