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Tax Credit for All Homebuyers, why not?

By Larry Lawfer

Real Estate Agent with YourStories Realty Group MA# 9517963

September 18, 2009 04:34 AM

I do think a tax credit for any home buyer is a good idea. Why not allow the person who is paying their bills to move up, move out, or decide to build on and do this with some assistance, just like the first time home buyers. If this is a good program for first time home buyers, why isn't it a good idea for all home buyers? This would provide a stimulation of the economy in so many ways. The builders, the realtors, the homeowners, the communities, the lumber yards, the box stores to sell more goods and services to put into these new homes, everyonebenefits from a more stabilized economy. Happy homeowners stabilize our economy. With prices at a 40 year low now is the time to grab hold of property that will rise back up through the next new economy. If you can do that because you pay your bills on time, why shouldn't you also be able to benefit the economy further with your proven good track record.

What do you think about all of this? Is this another bail out, or does this make economic sense. I am curious about what you might think.

On Broker Agent Social today I read this blog from Craig Bassignani. I read it and thought of this response to the possibility. Thanks Craig.

Tax Credit Raised to $15,000 with out limits!! Proposed

Posted: Thursday, September 17, 2009 - 95 comment(s) [ Comment ] - 0 trackback(s) [ Trackback ]

Category: BrokerAgentSocial.com

There is legislation in both the Senate and the House that would expand the tax credit. A proposal by Sen. Johnny Isakson, R-Ga., would raise the credit amount to a maximum of $15,000 for any buyer of any home over the next year. It would remove the income caps that currently apply (those limits are now $75,000 for an individual and $150,000 on couples).

"I think we've got a realistic chance of doing this," Isakson says. "Our problem is not with the first-time home buyer, it's the move-up buyer."

Lawrence Yun, chief economist at NAR, says extending or raising the tax credit would spur the housing recovery, which in turn would help bolster the economy.

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Julie Chapman

Julie Chapman Broker - Ormond Beach, FL

Daytona Beach Shores, Florida

Larry,

Isakson and his staff have been working on this prior to the passing of the original tax credit. I hope they have the backing this time.

Sep 18, 2009 04:37 AM

Brian W. Nichols

OWNER/Exit Realty Metro Dallas - Dallas, TX

This advice is sound! Obviously to lead our country out of this recession a bull market in real estate is a must! The talk of extending the First Time Homebuyers Credit of 8k is a beginning. But I agree with Mr. Lawfer that it is time to think big and outside the box! Stimulate our economy by building jobs in the biggest sector of our economy. Real Estate accounts for more jobs in our economy than any other sector! Let's make America financially secure once again. Historically residential real estate is the first thing to go down in an economic downturn and the first thing to come back in an economic expansion.

Sep 19, 2009 10:30 AM

Karen Otto

Home Star Staging - Plano, TX

Plano Home Staging, Dallas Home Staging, www.homes

I'd vote for this!

Sep 20, 2009 11:25 AM

Brian W. Nichols

OWNER/Exit Realty Metro Dallas - Dallas, TX

By Stephanie Armour, USA TODAY

Time is fast running out for first-time buyers hoping to get a tax credit of up to $8,000, and Realtors say they're seeing a marked upswing in interest as the deadline looms.

Real estate groups also are urging Congress to extend the credit beyond its current deadline and expand the tax credit to up to $15,000. Now, buyers must close on their purchase by Nov. 30 to be eligible for the credit.

Home builders and real estate organizations are concerned that letting the tax credit expire could knock the wind out of the current housing recovery. And failing to expand the credit could imperil efforts to get more move-up buyers into the market.

"Right now, the recovery is in the first stage and getting entry-level buyers in, but it's having no impact on the move-up buyer," says Richard Smith, CEO of Realogy, the parent company of Century 21, Coldwell Banker and others. "If we can expand the credit to go after that move-up buyer, we'll be home free."

The tax credit available to first-time home buyers is already linked with an uptick in sales. For the first time in five years, existing home sales have increased for four months in a row, according to an August report by the National Association of Realtors (NAR).

Sep 21, 2009 03:39 AM

Brian & Marie Spray

www.DFWAreaRealtors.com - Action Realty Group - Frisco, TX

Frisco TX Realtors

This is a tough issue. A huge problem will be how to end the tax credit once it gets started. Once the credit is there, yes it will spur sales and we all would become very busy. I would very much like that! Eventually though all good things must come to an end and then what? It would be like creating a dependency situation - giving a man a fish instead of teaching him how to fish. I guess though that if we are to have massive govt spending it might as well be on something that actually does something right?

Sep 23, 2009 05:57 AM

Tracy Lee Parker

RE/MAX DFW Associates - Royse City, TX

Buy*Sell*Rent

I would like to see the extension of this credit, but I have to agree with Brian and Marie on the dependency issue. Buyers will automatically expect the government, sellers and agents to pay the way to their new home.

Sep 25, 2009 08:44 AM

Brian W. Nichols

OWNER/Exit Realty Metro Dallas - Dallas, TX

This subject must receive serious consideration from Congress and The Fed! True stimulous comes from reviving the residential real estate sector which would also create more jobs than any other sector of our economy. For our economy to sustain growth and recover an extension and expansion of this tax credit program is a must. Inflation can be controlled if true recovery is encouraged to happen. People are moving due to a search for jobs more than anything else. To breath life back into our economy jobs need to come through real growth in our economy. This is the real stimulous that will help us back to economic health in our Great Land of America!

Sep 26, 2009 06:29 AM

Anonymous

Larry Lawfer

I don't think any rational person is expecting the Government to continue to bail out the homeowners. In the environment we have been living through the last couple of years the government has been involved in bailing out the banks and financial institutions because they neglected to monitor them and they in turn took all they could. Greed prevailed and now we are paying back. The homeowner was thrown a bit of a bone because they needed it. It has helped people get into a home and that is all good. I don't think the homeowners can expect this to continue, although I do think it makes sense to continue this option as we work through all the millions of homes still in foreclosure. There is a glut of homes that the banks and the government is not talking about. These home will become Short Sales, REO's if they are not helped through these troubling times. Our government has chosen to help the big picture and not the little picture (the homeowner). The banks are helping themselves and are ignoring the family that wants to keep their home, but can't afford their current mortgage. In a perfect world everyone gets help. In a real world only some can expect help and even with that help it will only come during a specific time. For however long the help exists, we should be doing everything we can to help homeowners take advantage of the plan. Frankly I do hope the plan gets extended for anothe period of time, but I do agree that it has to go away ultimately.

Sep 29, 2009 03:42 AM

Brian W. Nichols

OWNER/Exit Realty Metro Dallas - Dallas, TX

I believe our government must come to understand that if this program does not continue our economy cannot recover in a timely way. Historically residential real estate has always lead the way out of bad times! For that reason the government must extend and expand this program. Banks historically lend money to people who don't need loans,and those who do need loans don't get loans. The government saved all our greedy banks,and now they need to save mainstreet. To avert another Great Depression our Federal Reserve spent more than $1 trillion into our economy over the last 12 months. That money was used to buy up treasury bonds which in turn kept interest rates low, and also they bought up alot of troubled assets, including mortgage-backed securities which helped to prop up troubled lenders who won't lend a typical American any money these days. The result is record levels of debt,and useless banks who are flush with money, but won't lend any money. So the banks are supposidly flush, but they aren't lending. Since they aren't lending it forces businesses to stop hiring and instead focus on firing Americans. Further since they are not lending consumers aren't spending. So now our government which has fixed wallstreet must focus on the american public and fix mainstreet. The best way to fix mainstreet is to focus on the one industry that supplies over 50% of american jobs. Help fix the real estate market and you help america recover from these bad economic times.

Oct 15, 2009 09:52 AM

Brian W. Nichols

OWNER/Exit Realty Metro Dallas - Dallas, TX

Purchasing power is in decline with the dollar falling. Inflation is coming which will push up interest rates and home values! Take advantage of 40 year lows in interest rates and home values while they last!!!

Oct 17, 2009 12:37 PM

Brian W. Nichols

OWNER/Exit Realty Metro Dallas - Dallas, TX

By Lucia Mutikani Lucia Mutikani – Fri Oct 23, 4:56 pm ET

WASHINGTON (Reuters) – Sales of previously-owned U.S. homes jumped to a two-year high last month, according to data on Friday, though the looming expiry of a tax incentive for first-time home buyers was a major factor spurring sales.

The National Association of Realtors said sales of existing homes jumped 9.4 percent in September to an annual rate of 5.57 million units, the highest level since July 2007. Financial markets had expected sales to rise to a 5.35 million unit pace after a surprise decline in August.

Sales were partly driven by first-time buyers rushing to take advantage of the government's popular $8,000 tax credit, which is due to expire at the end of November. Sales were up 9.2 percent compared to September of last year.

"The rapid gain in home sales over the past few months likely owes, in part, to the home buyer tax credit. That said, the trend in home sales is still higher amid greater affordability and an improving economic outlook," said Michelle Meyer, an economist at Barclays Capital in New York.

Despite the bullish report, U.S. stocks fell as investors fretted over disappointing results from chipmaker Broadcom Corp and silicon producer MEMC Electronic Materials Inc, which bucked a recent trend of solid earnings reports.

The blue-chip Dow Jones industrial average ended down 1.08 percent at 9,972 points, slipping below the psychological 10,000-mark for the first time in two days.

However, home appliances maker Whirlpool Corp and manufacturing group Fortune Brands Inc reported third-quarter profits that were above market expectations. Fortune Brands also raised the low end of its full-year profit forecast, citing signs of stabilization in housing construction.

The housing sector's collapse and subsequent global credit crisis helped to push the U.S. economy into recession at the end of 2007. The downturn was the worst in 70 years.

The housing market is now crawling out of a three-year slump and analysts believe homebuilding probably contributed to economic growth in the third quarter, which would be its first positive contribution since the end of 2005.

ECONOMY GROWING AGAIN

Signs of recovery in the housing market coupled with other fairly upbeat data strongly suggest the economy started growing again last quarter for the first three-month period since the second quarter of 2008. The government will release data on third-quarter gross domestic product next week.

Sales for both new and previously-owned homes have been boosted by a combination of the tax credit, depressed prices and low mortgage rates.

But there are worries the expiration of the tax credit could hamper the recovery, and many lawmakers want to extend the program, with some pushing to expand it to all buyers.

The tax credit has so far cost the government about $10 billion and the Obama administration has yet to decide whether it will back an extension, weighing it against the impact it will have on an already bloated budget deficit.

"We are hopeful the tax credit will be extended and possibly expanded to more buyers ... because the rising sales momentum needs to continue for a few additional quarters until we reach a point of self-sustaining recovery," said Lawrence Yun, chief economist at the Realtors' trade group.

Distressed properties made up 29 percent of sales last month and first-time buyers accounted for 31 percent, but analysts said other forces also helped.

"Our view is that near-record affordability and falling inventory is pulling people into the market," said Ian Shepherdson, chief U.S. economist at High Frequency Economics in Valhalla, New York.

The inventory of existing homes for sale in September dropped 7.5 percent to 3.63 million units, the NAR said.

September's sales pace pushed the supply of previously owned homes on the market down to 7.8 months' worth, the lowest in 2-1/2 years, from 9.3 months in August.

On the prices front, the national median home price fell 8.5 percent to $174,900 in September from a year earlier, the smallest percentage decline in 13 months.

Oct 25, 2009 09:19 AM