That's the royal "We", as in, the feds, lenders, buyers and us, yeah, real estate agents.
Most people cheered when the homebuyers tax credits were implemented, and then extended, and then included move up buyers. Of course there were some out there saying that it was only meddling and would not help, at best stealing future buyers.
I understand why it was implemented the first time, in a Q&A sesssion with Senator Isaakson (one of the authors of the original credit) he clearly explained how it was supposed to stabilize the real estate market. Of course, this program, just as the rest of the stimulus package and the various programs designed to keep people in their homes, failed to do that.
And now, some of those who received those tax credits are going into foreclosure less than a year after the program ended. I am hearing and reading this question more and more as the weeks go by. In fact, before the original timeline was extended beyond Nov. 30, 2009, some of the original recipients of this were already being foreclosed upon.
So, was this program really worth it? I am sure that there are some people who purchased homes and are currently not in any danger of foreclosure are saying yes. That tax credit might even be offsetting any losses in values sufferred since then. However, when we look at the forest, when we consider the big picture, perhaps not. It is estimated that the tax credit resulted in an increase in home sales of about 350,000 units. At a taxpayer cost of $15 billion for the program, that is $43,000 of taxpayer money per additional unit sold.
And what was the other impact. After the dust settled last year, the real estate sales volume crashed (not unlike auto sales at the end of cash for clunkers). Yes, a decrease in volume was foreseen but not to the extent that occurred and for the duration.
And now we are having foreclosures and taxpayers will be paying twice for many of these homes. After all, probably 95% of them, if not more, were insured under one government loan program or another.
When will the government learn programs like these, no matter how well intentioned or popular, are about as effective of putting a bandage on a snake bite. It might make things look better for awhile, but until you eliminate the poison in the system, things just get worse.
Oh, the answer to the question about having to pay the $8000 back - maybe.
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