The crazy train that is Congress just keeps on rolling this week. Despite the overwhelming cost to taxpayers of the homebuyer’s credit, Senate Majority Leader Harry Reid (D-NV) has caved to housing lobbyists decided that money does, in fact, grow on trees panicked about the number of seats the Dems appear to be losing in 2010 lost his ever-loving mind co-authored a bill to extend the homebuyer’s credit. Again.
In case you’re keeping score at home, we’ve had a “temporary” homebuyer’s credit in one version or another since 2008. You know, to spur a slow housing market. Since 2008.
The new proposal would allow for buyers to close on a home by September 30 – the original deadline was June 30. Not coincidentally, perhaps, that date is just before a busy election season.
Of course, it’s the National Association of Realtors who are begging for the extension. They claim that many taxpayers will not be able to close in time to qualify for the credit due to a myriad of issues including the inability to get adequate financing for a new home or problems selling an old home.
Hmm. Imagine that. A taxpayer incentive to buy a new home that you *might* not be able to afford with a manufactured deadline to sell an old home in a weak market – and there are issues? How could that be? Not that we’re trying to create another bubble or anything by enticing folks to buy when *perhaps* they’re not ready. Gah. Where is that Adam Smith when you need him?
I am buying a house right now. Started the process after April 30th, so I wasn’t planning on getting the credit. I would *love* love love this. I could so use the $8k, it’d be phenomenal. But, I do agree at some point the market has to be able to stand on it’s own two feet. What would make a lot of sense to me is to index it down over time. So, thru september you get $6k, thru December $4k, and so on.
I agree that it’s stupid, but I do want to point out that this actually originated with Georgia GOP Sen. Johnny Isakson, a former real estate professional and one of the original major advocates of the tax credit. He convinced Reid to join/add to the extenders debate (http://bit.ly/adUCq7 ). Viva la minimal bipartiansion … or not!
@Justin — the proposal only extends the deadline for those who were already under contract by April 30 — you wouldn’t get anything in the current proposed version unless some last minute changes/deals are added.
Taxgril, I think the main arguement is that so many people signed contracts that the process — which needs an
enimaoverhaul — is bottlenecked.Maybe they should just come up with a perminent tax credit that is scalable to income and price of home. Something like if you make less than $50K, you get $8K as long as you don’t purchase anything above $300K. If you make a little more, you can purchase more but you get less back. The idea being to make sure only people who can afford the big ticket homes buy the big ticket homes.
“Maybe they should just come up with a perminent tax credit that is scalable to income and price of home. Something like if you make less than $50K, you get $8K as long as you don’t purchase anything above $300K. If you make a little more, you can purchase more but you get less back. The idea being to make sure only people who can afford the big ticket homes buy the big ticket homes.”
Now THAT sounds like a phenomenal idea! I can only HOPE it will be adopted!
I pretty much agree for the most part with the comments above. I think the wise and smart thing to do would be to EXPAND THE CREDIT again BUT INCREASE THE SIZE OF THE CREDIT ALONG WITH A LONGER DATE, Say, $10,000 with a signed contract by May 30, 2011 for ANY HOME BUYER who does not make over $500,000. At the same time, DECREASE THE AMOUNT OF THE CREDIT BY $1,000 each month a buyer procrastinates to sign a contract. That is, if it is extended again starting October 1, 2010 then a contract much be signed by August 1, 2011. What this does is several things. As all of us know, SUPPLY & DEMAND is the NAME OF THE GAME or Economics 101. When Consumers stop spending and buying, the entire economy plunges, jobs are lost, people become fearful and start holding on to every dollar more tightly, and Washington is caught in the middle as far as what to expand, cut, increase, do away with, etc.
Getting back to EXPANDING the HOME BUYER CREDIT for another year, it would help banks, appraisers, underwriters, buyers, and sellers to have more time to streamline loans, get the house they want, fix up a home to sell and maybe buy another home, allow all HOME BUYERS THE EXACT SAME OPPORTUNITY TO BUY AND GET THE CREDIT regardless if it is your first or third home. BY REDUCING THE AMOUNT OF THE CREDIT BY $1,000/mo a buyer signs a contract, you are sending a strong message, “WAIT A LITTLE AND GET WHAT YOU WANT BUT A SLIGHTLY LOWER CREDIT, KNOW WHAT YOU WANT AND SIGN NOW TO MAXIMIZE THE CREDIT, WAIT A LONG TIME AND GET A SMALLER CREDIT, or DO NOTHING and GET NOTHING.” What this will do is create CHECKS and BALANCES. For those who really want a home but need the money (I understand everyone doesn’t BUT the Economy is IMPACTED TREMENDOUSLY). I say this because for every home that is sold, at least 70 small businesses are involved in that home from windows, carpet, siding, cement, roofing, HVAC, hardwoods, cabintry, curtains, furniture, appliance makers, landscaping companies and servicers, hardware stores, lighting industries, drywall, paint companies, Iron and Steel, bathroom and bedroom accessories, and so many others. Our #1 problem in the United States now is very high unemployement due to many factors, which I will not get into. For every home that is sold, much of the $8,000 credit, if not more will be recouped because when businesses sell a lot more items, more taxes are paid on the revenues earned. Plus, many buyers will spend so much more in order to stimulate the economy, therefore less unemployment benefits are paid (huge savings down the road), more people are back to work, thus paying more income taxes, and the overall economy will begain to really bounce back.
Finally, we as Americans must remove the politics and stick with what works – SUPPLY & DEMAND, RESTORING JOBS TO GREATLY REDUCE UNEMPLOYMENT, & RESTORING TRUST BACK INTO AMERICA. When the Credit is extended in a MORE PRACTICAL & FUNDAMENTAL WAY, buyers will be pushed (with plenty of time) to act sooner to max out the credit while getting what you want OR procrastinating and getting little or nothing. Banks at the same time have played the biggest role in the mess we are in due to GREED, which put us in the mess we are in (still too much GREED even now), lending standards so tight that many lenders will not lend to good people with good credit and income due to outrageous stipulations, very high Mortgage Insurance Premiums unless you can put down 20% (99.9% of Amercians CAN’T DO), and putting WALL STREET before MAIN STREET. Without MAIN STREET, there WILL BE NO WALL STREET! Washington, Lawmakers, Banks and Lenders, Investors, and Lobbiest need to keep this GOLDEN RULE in their PORTFOLIOS, POLICIES, and TRANSPARENCY. I said all of that to say this; America MUST get back to the fundamentals in this country that made us NUMBER 1 FOR DECADES. Put the Consumer first and the TOP or BIG BUSINESS will GROW! With the Credit Extention, this will not only stabalize home sales but help get us out of this 4-year recession if not longer. 10 monhts is plentty of time to give buyers and sellers a chance to buy and sell on one hand, while giving lenders, underwriters, appraisers, and others in the pipeline plenty of time to do their jobs timely, effectively, progressively, and accurately. This will also prevent too many people waiting at the last minute to get the credit causing a major influx of loans and contracts to be underwriting. Should 40% strong sign a contract during the first month of the tax credit, the banks and underwriting will have 9+ months to do their jobs smoothly rather than only have 60 days to process so many loans. At the same time, as each month goes by, the number of loans should start decreasing therefore not putting a strain on everyone in the process. The bottom line is this: IF WASHINGTON DOES NOT PUT AMERICA FIRST IN ORDER TO STIMULATE ECONOMIC GROWTH AND PROSPERITY, COUNTRIES LIKE CHINA and INDIA WILL MAKE MUCH OF THE MONEY, WHILE WE LOSE OUT. WE AS AMERICANS BUILT THIS COUNTRY AS ONE AND MUST STAY TOGETHER AND REBUILD AS ONE IN ORDER TO LIVE IN A COUNTRY OUR VETERANS AND MILITARY HEROES HAVE FOUGHT FOR ALL THESE CENTURIES! Let’s keep the MILITARY FIGHTERS AND THEIR FAMILIES IN OUR PRAYERS AT THE SAME TIME!