False Starts and Dead End Streets to the Economic Recovery- The $8000 tax credit was intended to help spur the economy with increased incentives for purchasing a home by the one sector free to purchase and not encumbered by a home to sell. In theory, when first time home buyers purchase a home, a trickle effect will occur where the seller will now be free to "Move Up" and purchase a larger home, and the cycle will repeat itself over and over.
The REO Banks Benefit, but Few Sellers Do- The reality has been quite different in my area of coastal Alabama. With most of my sales, my first time home buyers have purchased foreclosed and bank owned homes (REOs). Obviously, this has not set another home owner free to add to the economic recovery and spend their dollars on a larger or more expensive home purchase to repeat the cycle. Each foreclosed purchase has been a one-shot deal, where the bank benefited and my buyer benefited, but did it help the economic recovery?