There has been a lot of buzz about extending the First Time Homebuyers Tax Credit. Why? For two reasons...
- Because the $8,000 Tax Credit expires on November 30th, 2009.
- And because many have stated that these tax credits have stimulated the housing market and our economy.
We have heard mention of recession, great depression, inflation, economic default, hard times, etc, etc. Has the First Time Homebuyers Tax Credit helped the economy and the housing market? Yes, in some cases. But people, it's another gov't band aide.
In regards to the tax credit, many have argued that it has gotten them more clients that would have never bought. My thought? Home buying can be an emotional process. It can also lead to misinformation on why one might buy. I am a frim believer that people will buy anyhow. Did it get some off the fence? Sure it did. Keep in mind, many real estate markets are different from each other.
But let me pose a question to everyone out there. Where do you think this money is coming from? Who do you think will be paying for this? Is our society a welfare mentality, just printing money that we don't have? Should we run our Country like a business or as a soup kitchen? Brian Brady added to my thought process with this eye opening post. Suspend the practice of flesh devouring : let the tax credit expire.
You can’t have your CAKE and EAT it too..
What inspired me to write this post, was after reading the comments on Loreena Yeo's blog, Would Congress please extend the $8,000 tax credit.
People, let's be honest with ourselves. Are we also scared if the tax credit is not extended, that it could also hurt our commissions? Just think about this. But what caught my attention were many of the comments on Loreena's post that said, "Please extend the tax credit", yet most of them didn't state why. And if they did, they said because it's helping the housing market. Based on whose facts? Yes, this can be debated.
But what about this... many of these same realtors wanting to extend the tax credit, were the same ones that said one of two things...
1. You should have skin in the game (by Lenn Harley) or
2. knocked the seller funded downpayment program, such as Nehemiah or AmeriDream
Shouldn't these same arguments be applied to the tax credit then, for those that are able to use the tax credit at closing? Let me explain further....
So how do we get out of this mess and and have an Economic Recovery, which the real estate market is a big part of.
How about starting with unemployment. Loreena argued that buying houses creates 100's of jobs, specific products would be bought. I agree and disagree. Because you will also lose jobs in the process.
But let me get to my point. Shouldn't we find ways to a recovery that wouldn't cost the tax payers money? I also read in many of the comments that the tax credit helps increase multiple offers in many areas, driving up the price of the home. Will many of you agree with this?
So prices have increased. Is this a ghost price? A real price? An inflationary price? If we accept this, why not bring back the seller funded down payment programs then? Known as the DPA programs.
Conclusion : The argument on Capital Hill and amongst many realtors and loan officers has been that you need skin in the game. And then the next wave would argue against the DPA program, because it could inflate the price of the home. But we have established that the tax credit does the same. But wait, it is costing us tax payers money for the tax credit, yet the DPA program doesn't cost the tax payer any monies.
Overall, aren't we a powerful country? With some of the smartest individuals, yet we are way in over our heads. What happened to common sense? Are we just mere puppets of a gov't that says they know best for us? Is our society a welfare mentality, just printing money that we don't have? I thought I found some common sense solutions that I wrote about in June 2009. Call to Action - We must fix the real estate market ourselves. Keeping in mind, that all of this is of my opinion, but with careful thinking and not of that of my pockets.
For other view points on this topic, please read :
- The Press is On : By Lane Bailey - I think this is a very good read and we should pay attention to this. He talks about stopping the tax credit.
- Would Congress please extend the $8,000 tax credit - By Loreena Yeo - Even though I am opposite of Loreena, read the comments. One needs to understand Economics, supply & demand, but also that hand outs have crippled us in the past.
- Suspend the practice of flesh devouring : Let the first time homebuyer tax credit expire. By Brian Brady - A great twist and creative view point of our children's future.
- We are going 35 mph, and about to hit the wall. - By Alan May - His complaint is that many people are rushing to take advantage of the tax credit. And that lenders with their delays will hurt buyers chances. Hey, I love helping first time homebuyers, but the tax credit has been around since 2008. If buyers waited last minute, do we keep extending, yet costing us millions of dollars in the future. What about inflation? Inflation vs deflation - Is it criminal?
- Why devouring flesh is morally wrong. By Brian Brady - Brian extended his argument and included a great video. Maybe this will open some eyes?
- Are first time hombuyer mortgage programs ending soon? - By Steve Kappre - Steve talks about how some states were able to get you the $8,000 tax credit at closing. But keep this in mind, less than 50% of all states has this type of program.
- Extending the First Time Home Buyer Tax Credit Now?.... What's the rush? - By Lenn Harely -
I think this is an excellent article, because it's shorter than mine and too the point. Yet it brings up some easy to understand issues.
- Call to Action - We must fix the real estate market ourselves. - By Jeff Belonger - I wrote this a few months ago. I think some of the solutions mentioned by myself and in the comments, seem to be common sense, and in many cases, not cost the tax payers money.
- For god's sake, let's move on - By Paul Henderson - Paul offers a few more opinions...
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