Monday, October 19, 2009

"Just say no" to first time buyer's tax credit extension

I don't think we'll see an extension of the first time buyer's tax credit. Although popular among active buyers, I don't think its a difference maker. I'd like to see all these select incentives go away and let things get back to normal for everyone.


Michael S Messinger said...

How would you feel if the tax credit were expanded to include almost all home buyers?

Anonymous said...

Amen. We already have mortgage interest deductions, FHA loans, and artificially low mortgage rates influenced by the Fed. Why do we need a fourth housing subsidy?

Eric Rojas said...

The NAR lobbied for a $15,000 tax credit for all buyers in the beginning of the year. That went nowhere.
We ended up with sort of arbitrary $8,000 for first time buyers as defined by the federal government.

When we were in total chaos, I think the credit nominally (and very nominally) got people interested in what's available to them lately.

However, economic experts say these major stimulus like national tax credits can take 5 months for the public to really take notice and advantage of the incentive.
So, the real motivation for buying has been people's growing confidence in their personal financial situation, low prices and low interest rates.

Basically, the crash is behind many people "mentally" and interest rates are low. If that continues, we'll see sales.

I'm not really interested in extending the tax credit to everyone, nor do I need it to help my particular business.

I can see expanding the tax credit for everyone possibly "helping" in other parts of the state and country. However, the problem is bank owned property and lending... price will be price and settle itself but banks make it hard for people to buy.

MichaelM said...

I love that there are a lot of homes on the market right now at affordable prices and that the interest rates are low, artifical or otherwise. However, the thing that is holding me back is that the home I want would require a tax credit incentive to get me off my duff and purchase it.

Anonymous said...

Eric, I agree with you. Prices are low. Interest is low. People are either in the market or not. Taxpayers cannot afford to be offering any more incentives. The markets need to function on their own. The government should be looking at how the banks are handling short sales...or maybe I should say not handling. I think this could make a difference in the market...saving the banks a lot of money and getting homes off the market before they go into foreclosure.

Eric Rojas said...

The government has forced big money on the big banks, paid all this attention on banks lending money (which they are not lending enough to the government's standards) and now the administration is hung up on bank and corporate compensation (which I have to agree has been completely ridiculous for decades).
However, there are no improvements on moving inventory in foreclosure or making it easier for underwater sellers to sell at market rate.

There should be waves of auditors/ people hired and assigned to banks to process short sales with a uniform standard.

The government is forcing banks and companies o do all sorts of things but then is hands off the ridiculouse short sale process.
The result is buyers walk away and house reamin vacant, vandalized and blight neighborhoods.

The lenders won't lend to a buyer if one hair is out of place. And, their strict rules change all the time when it comes to lending into new construction or lending on homes that need extensive rehab.