Looks Like The Home Buyer Tax Credit Is Extended ... Good or Bad ... and WHY

By
Real Estate Sales Representative with Weichert Realtors - Shoreline Properties

Okay ... I'm interested in a real discussion.  ALL POINTS OF VIEW WELCOME, ENCOURAGED AND RESPECTED.  I'm not looking for platitudes and feel good/philosophical comments ... I'm looking for real feedback. 

I want to understand what people understand and why they think they understand it.

The Home Buyers Credit was approved by the House of Representatives, and the Senate and now needs to go back to the House of Representatives and get signed by the President.

Here's an outline of what it's supposed to look like (barring any additional revisions I haven't heard about yet):

First Time Home Buyers Credit of up to $8000 is to be extended.  Must be under contract by April 30, 2010 and closed by June 30, 2010.

Home Buyers Credit of up to $6500 will now ALSO be available to existing homeowners that have owned property for the last 5 out of 8 years.  Must be under contract by April 30, 2010 and closed by June 30, 2010.

Does this HELP or HURT or BOTH ... and WHY?

 I am of many minds on this topic.

Some of the benefits as I see them are:

The Home Buyers credit stimulated and increased sales in many, although not all areas of the country.  This helps sellers that need to sell, helps buyers that want to buy due to currently low interest rates and significantly decreased home prices, it reduces inventory, stabilizes sale prices and assists the overall economy with the peripheral economic benefits that are derived from increased real estate activity (people need furniture, home repairs, contractors, landscapers, electricians, plumbers, Realtors, home inspectors, appraisals, attorneys, etc. etc.)

Some questions and concerns I have:

There are two things we can count on ... at some point the home buyers credit will end and interest rates will go up.  Is what the current administration doing inflating another mini real estate bubble?  What happens when the tax credit ends and the interest rates start to go up?  Will we see another precipitous drop in market value and activity again?  Are we just delaying the inevitable corrections that need to happen in individual markets?  Or, will this "stimulus" push the housing market through this rough economic patch so everything stabilizes and the real estate market returns to normal levels of price stability and activity?

Then there are other points such as if the government can bail out the banks, well then they can certainly help the little guy as well with the home buyer credit.  This is "free money" to home buyers, which they will then supposedly go out and spend to stimulate growth in the economy.  Will this then aid in the so-called "jobless recovery"?

But ... is this money really free!!!  At the end of the day don't we ALL have to pay for this?  Won't we all have to pay for the Cash for Clunkers free money?  The bailouts to banks? The cash for refrigerators for goodness sake!!!

I see lots of people looking at the home buyers credit from a personal perspective ... personal in how it helps THEM.  I understand that, but shouldn't we also look at it from a bigger picture perspective also?  Because although these things may help us TODAY ... will they hurt us done the road. 

And if so, will it hurt more or less then ... and will it have been worth it?  Should we be thinking about these things now, or continue to abdicate our personal responsibility in understanding how all these moving parts will ultimately come together?

 

 

 

 

 

Comments (4)

Frank Rubi
Frank Rubi Real Estate, LLC - Metairie, LA
FrankRubiRealEstate.com

Diane, It is over all great news. I wish they would have waited until this credit expired to keep the pressure up.

Nov 05, 2009 03:15 AM
Taylor Shults Philley
Austin Realty Firm - Austin, TX
Broker, Realtor , GRI

Diane, thanks for letting me know you found my blog on google!I had not idea! That's one of the greatest benefits from blogging and I'm glad I can finally see that benefit! Good points in your blog; I see both sides as well. Though we will pay for it over time, I think this credit is something we need now . . . to get everyone moving in the right direction. So I'm all for it! ....though it should end at some point, and maybe some point soon?

Nov 05, 2009 05:23 AM
Lori Stenbeck
William Raveis Real Estate, East Lyme - East Lyme, CT

Diane, glad you are now blogging!  Can't wait to hear about your opinions.  Though I agree and disagree with this blog.  I think that in the end we do all end up paying for all of these different tax credits!  Also, believe that they structured the tax credit wrong in the first place.  Think they should of given larger tax credit to current home owners in order to allow them to move up in sales price.  Having the tax credit around for first time home buyers in the last two years, has stimulated the market a little but they are buying short sales and bank owned properties.  Giving the tax credit to current home owners opens up there current homes to be purchased by the first time homebuyers allowing there to be a purchase and sale in a deal now, instead of there just being a sale on a short sale or REO property. Also, think they should have waited till current credit expired!

Nov 11, 2009 06:57 AM
Diane Zorich
Weichert Realtors - Shoreline Properties - Branford, CT

Lori - Thanks so much for reading and commenting on my blog.  I think you raise some extremely good points.  I think it'ill be interesting to see if the tax credit for existing homeowners stimulates the market in the near term or in the spring, if at all.  I would think the credit will have a positive impact rather than no impact.  Hopefully, existing home owners won't wait until the eleventh hour to take advantage of the credit like so many first time homebuyers did. I also agree the credit should have been extended after the existing credit had expired.

Taylor - Thanks for sharing your thoughts.  I'm all for moving in the right direction :)  Good job on your "google juice"!

Frank - Thanks for your comments.  I agree ... they should have waited to extend the credit.

Nov 11, 2009 07:28 AM