It' obvious that the original $8,000 tax credit for first time home buyers helped put a little pep in the economy step. With each home purchase pumping roughly $57,000 back into the economy I'd say yes, it did help.
I was all for it! Why? Because it wasn't a cash bailout which has proven disastrous time and time again. I also like it because it's nothing like the cash for clunkers program which gave dealers a glimmer of hope then killed that hope with payment issues and various other things. When the cash for clunkers program ended so did many dealers. People that wanted cars bought them while the program was going on only to leave dealership showrooms empty after it was over. Many of these "clunkers" weren't clunkers at all; in fact many of them if left on the road would be helping the economy today. Ok, so you and I may not want to show up to a listing appointment in one of those "clunkers" but people who need cars drive them. People that drive them also have problems with them which pumps more money back into the economy via repairs.
Now the new (proposed) tax credit. Again, I'm all for helping out first time buyers. It will continue to move the economy in the right direction as well as reduce inventory in many areas flooded with homes on the market. My concern is this. Is the addition of the $6,500 tax credit to current homeowners going to be our cash for clunkers? It might be. It can be. It only requires three simple things in order to do so.
Step 1 - Government offers the tax credit to current homeowners as well as first time buyers.
Step 2 - Current homeowners who prior to this may have stayed put decided to toss their home up on the market and buy a new home. After all this is a buyers market, they can take their hit on the current home and make it up on the new one.
Step 3 - The program has to end eventually.
Step 4 - This, my friends could be our cash for clunkers program coming to a screeching halt. Many markets will be flooded with inventory once again. Those who wanted and could qualify for a home and the program have made their purchases. Some that moved to their new home without selling their current home will no be facing two mortgage payments....just what we need more bank owned home.
I'm by no means an expert on real estate or the economy but this is going to go one way or the other. Let's cross our fingers and hope it's the other, whatever that might be.
Regardless of the outcome we need to start weaning ourself off the boob of the Government!
As Agents we must not worry about what will happen down the road. We must seize the moment and get our buyers in homes during this giveaway.
Russell Real Estate Services - Strongsville Ohio