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first
hurray, GMT+1 xD
Credit for trying?
This tax credit seems ill-conceived, and probably should be removed from the stimulus package. No one has adequately explained how this helps "fix housing first".
Isn't the problem that we're even trying to 'fix' housing, let alone doing it first? The 'fix', as you say, is for prices to return to normal. What's so difficult about that concept?
Some sellers may increase their asking price by $15000, too.
The Senate & The House have NEVER been accused of being overly bright.
.....another case of the retards running the hospital.
Turnover = demand = fees for banks.
God, I would hate to be an IRS auditor charged with enforcing this monstrosity.
Isakson is a relitter. He was President of Northside Realty in Atlanta immediately prior to being elected to the Senate.
So, no surprise there.
The reason it may prop up prices is that money tends to level, i.e., it doesn't flow in one direction. It is like water in that respect. A buyer thinks of this as $15000; a seller thinks of this as $15000. It may get split. This phenom. is seen with hybrid vehicle tax credits, where the dealer adds the value of the credit to the MSRP.
Another one bites the dust
By David M. Levitt
Feb. 6 (Bloomberg) -- Boston Properties Inc., the biggest U.S. office landlord, plans to suspend construction on a $980 million midtown Manhattan skyscraper after a law firm abandoned plans to lease space there.
Recently the law firm informed the company that it could not proceed on those terms, thereby rendering the project economically infeasible in todays environment, the Boston- based company said today in a statement. The 1 million square- foot tower at 250 West 55th St. and Eighth Avenue was scheduled for completion in 2011.
How about a credit for 15k to refinance, that should help the banks too.
The reason it may prop up prices is that money tends to level, i.e., it doesn't flow in one direction. It is like water in that respect. A buyer thinks of this as $15000; a seller thinks of this as $15000. It may get split. This phenom. is seen with hybrid vehicle tax credits, where the dealer adds the value of the credit to the MSRP.
biomass 5
How's the lender get his piece. Higher rates?
This tax credit seems ill-conceived, and probably should be removed from the stimulus package. No one has adequately explained how this helps "fix housing first".
Jerry | 02.07.09 - 3:09 pm | #
This could work. All we need is for those "instant tax refund" loan people to run a scam so that the 15K can be used a a downpayment, 'cause people still need to come up with a downpayment to get a loan to buy that house.
So does anyone know who purchased this legislation? Obama's "no more politics as usual" seems just as absurd today as it did during his campaign.
Hey, check out CMBX vertical charts! Almost every index has broken through its highs. Seems at odds with SRS movement. In the past this has signalled a screamin' buy for SRS !
Don't know all the details of this piece of shit, but I am sure it will be gamed in ways politicians and economists are too stupid to stupid to understand.
Tax refunds in 2010 will drive us out of the recession! Now we know when this thing ends...
And I am too stupid to use preview.
There may be many abuses with this. Congress may have put it out there to explore what new acts of financial genius can be conceived of -- not the intent, sure, but an intended consequence.
I think this should be part of the Hope Now program. We still got that thging going?
....try to forget the idiocy of the proposal for now, why is it that the government is involved with influencing life-styles, societal attitudes, and showing preferences for higher-income families? This is utter bigotry, pure and simple.
Lets not also forget the "buying of votes - both in Maine & Illinois. Quite frankly, this is a national disgrace, but then there seems to be a lot of that going around of late.
And who's going to be checking to make sure it's owner-occupied?
4.9 existing homes bought in 2008
Not correct. But it did feel like that around here.
Nice analysis, CR. Thanks.
Agree !
Another case in point of these out-of-touch with mainstreet goddamn Congressiters having their collective heads up their asses.
Without real estate buying and consumer spending at a strong enough clip the US economy is anemic or downright sucks.
Hey, check out CMBX vertical charts! Almost every index has broken through its highs. Seems at odds with SRS movement. In the past this has signalled a screamin' buy for SRS !
bearly
Looks like a leading indicator. Last Nov. when it spiked, SRS responde 1-2 weeks later.
mattdog, existing home sales in 2008: 4,912,000.
I'm not sure why you say that is "not correct".
Best wishes.
Any amendments voted in the Senate (like this piece of crap), will be very hard (call it impossible) to remove in conference. The GOP will go batshit if one penny of their changes in the Senate bill are altered in the final bill.
As in Down Goes Frazier, if Collins, Lieberman, Nelson and whoever don't vote with the Dems to get 60 votes on the final house/senate bill, there is no bill.
The best thing for the conference committee to do is write a Dem. consensus bill and introduce it as a budget reconciliation bill in the Senate, and then only 50 votes are needed. When doing so, they should remove this insanity and much of the tax cut feces put in the Senate bill trying to get 'bi-partisanship'. You can't be bi-partisan with a rabid dog.
Calculated Risk writes:
This tax credit seems ill-conceived, and probably should be removed from the stimulus package. No one has adequately explained how this helps "fix housing first".
Let's follow the money, shall we?
Before this travesty of a bill was considered, the gubbermit money seems to be going to prop up insolvent banks and 'defense' contractors. One can presume that this money will flow into at least some of these pockets yet again. To me, it looks like the 'defense' pockets are already full of ponies, so this must be an attempt to slow housing price declines, as well as yet another way of the rich getting richer at the expense of everyone else.
No pony for me-not even an old one with bad teeth.
Joke. The word "million" was omitted. Sorry.
I think there's something to be said for the idea that anyone able to qualify for a mortgage probably doesn't need this help ... or is the $15000 going to be used to help someone qualify?
Once the entire country's mindset shifts into "oh, shit," emergency mode, house buying isn't going to work the way the government hopes over the next few years.
Ripley: "We'd better think of something, we'd better think of a way!"
Private Hudson: "Think of what?!? We're fucked!"
Corporal Hicks: "Shut up!"
Private Hudson:"We're doomed!"
Corporal Hicks: "Shut up!"
I assume the idea is to draw first time buyers into the market. Theoretically that could reduce housing inventory.
However, I think it is more likely to increase house prices by $15,000. (Which would help sellers, be they individuals or banks).
What happened to the tax rebate for buying a new car??
Lawmakers in 20 states move to reclaim sovereignty
Obama's $1 trillion deficit-spending 'stimulus plan' seen as last straw
Lawmakers in 20 states move to reclaim sovereignty
Last one out is a rotten egg.
IMF calls depression
By Angus Whitley and Shamim Adam
Feb. 7 (Bloomberg) -- Advanced economies are already in a "depression" and the financial crisis may deepen unless the banking system is fixed, International Monetary Fund Managing Director Dominique Strauss-Kahn said.
The worst cannot be ruled out, Strauss-Kahn said in Kuala Lumpur, where he was attending a gathering of central bankers from Southeast Asia. Theres a lot of downside risk.
Ten days ago, the IMF cut its world-growth estimate for this year to 0.5 percent, the weakest pace since World War II. Stimulus packages alone wont succeed in dragging the global economy out of recession unless confidence is restored in the banking system, Strauss-Kahn said today.
Beaver the Mover in OC, CA here....
selfishly, I love this plan.....wealthier people moving means my income is stimulated....Yeah!!! I've been lonely to long!
anecdotally, I am starting to receive inquiries from people, who have been fiscally conservative, and are now ready to move up from a $450,000.00 home in OC, Ca to a $600,000.00 home in OC...they are moving up to give their children a backyard, etc.
They believe that the loss they will incur on thier current residence will be more than opffset by the lowered price on the "buy" side of their transaction...I saw this same thought process occur last year with wealthy people downsizing, but, this is new to see middle class people "upsizing" for traditional (not speculative) reasons...
It has been about 18 months since I have seen much activity in this marketsegment.....
also, I have started to see people selling their $460,000 condos in OC and taking jobs out of state in Arizona and Texas where they can purchase a much bigger and much cheaper house and remain employed....these people are selling their home at a loss and not "walking away" ...
my estimating appointments have increased significantly in '09 versus '08........
much of the homesale volume last year was in low priced short sales and fc's, and, those people do not use movers.....as the higher priced homes become distress sales, I believe I will see an increase in people "moving up" within OC and these people will use a mover.....
a $15,000.00 tax credit will only be able to be used by a person who actually has equity and/or cash to use for the purchase of a new home...it will not benefit the foreclosure/short sale/pulled oput tons of MEW seller, and, morally, I think this is just peachy....
Hooray! That $1.5 million shotgun shack in Palo Alto just got 1% less unaffordable!
This is part and parcel with the idiotic plan to try to reinflate asset prices. This is really nothing new. At the end of the road, the government will be buying houses (and other things) outright in an attempt to inflate the market.
What happened to the tax rebate for buying a new car??
It's in there.
This is an woeful attempt to put sandbags in front of the tsunami of plummeting house prices (especially in the upcoming spring & summer selling season).
Prices still need to fall substantially to be truly affordable. The majority of people are receiving layoff notices, furloughs and wage freezes.
WIPEOUT!
Streets empty.
Tv-sofa.
Constitution gone.
Buy bigger now for the $15k, go underwater $30-50k next year. Satan, the great tempter.
[bad link on comment from thread below]
German interview (Deutsche Welle) with Joseph Stiglitz
: "Nationalized Banks Are "Only Answer," Economist Stiglitz Says"
Deutsche Welle: Economists Nouriel Roubini and Nassim Taleb, who predicted the global economic downturn, have called for a nationalization of banks in order to stop the financial meltdown. Do you agree?
Joseph Stiglitz: The fact of the matter is, the banks are in very bad shape. The U.S. government has poured in hundreds of billions of dollars to very little effect. It is very clear that the banks have failed. American citizens have become majority owners in a very large number of the major banks. But they have no control. Any system where there is a separation of ownership and control is a recipe for disaster.
Nationalization is the only answer. These banks are effectively bankrupt. [emphasis added]
Joseph Stiglitz was awarded the Nobel Prize in economics in 2001. Under US President Bill Clinton he served as chairman of the Council of Economic Advisers from 1995- 1997. He was chief economist of the World Bank from 1997-2000 and was a lead author of the 1995 Report of the Intergovernmental Panel on Climate Change, which shared the 2007 Nobel Peace Prize. He is currently a professor at Columbia University in New York.
Good article on Fed contraction, not tightening.
macroblog: Contraction, not tightening
This tax credit will actually lower home prices. And that's why it's a brilliant move.
More details:
Blogger: Blog not found
Hey Rhodesian, you left out the best part:
Private Hudson (hysterically): Game over, man--GAME OVER!!!
.
As someone said the other day, 15K is a rounding error in the OC.
If this goes through, I do see sales picking up, but the shadow inventory will re-appear on the market. The time to buy will be after the year long benefit expires. Yet another attempt of an industry to steal demand from the future.
So if you buy a house in Detroit you get a rebate of $10?
Latest cuts to the stimulus package
"Total Reductions: $80 billion
Eliminations:
Head Start, Education for the Disadvantaged, School improvement, Child Nutrition, Firefighters, Transportation Security Administration, Coast Guard, Prisons, COPS Hiring, Violence Against Women, NASA, NSF, Western Area Power Administration, CDC, Food Stamps
Reductions:
Public Transit $3.4 billion, School Construction $60 billion"
Gawd, glad we're reducing food stamps and child nutrition so we can prop up inflated home prices with a tax credit /snark/
Latest Cuts To The Stim Package: Head Start, Child Nutrition, Food Stamps Public Transit | The Plum Line
The tax credit is a stupid idea, but it has one silver lining: it provides another opportunity to assail Sen Lieberman for his perfidy.
To think that mass transit got axed from the bill in order to introduce gifts to people with $100K incomes.....
I might be a little slow this morning, but what's to stop me and my brother from buying each other's houses and each pocketing our $15,000 tax credit?
In reality, I'm probably not wealthy enough to make this worth the bother, but I suspect there are lots of rich people whose accountants are even now planning such wash sales...
.
736 pages of the Stimulus bill
The Stimulus Bill
Any of you dopes that voted for the chosen one ready to admit you got duped again? Remember his line in the sand of $250k where everyone below that limit gets tax cuts? READ MY LIPS!
The accord dropped tax cuts worth $18 billion and reduced the income cap for workers who would benefit from Obamas $1,000 payroll tax credit. The cap was reduced to $140,000 from $150,000 for married couples and to $70,000 from $75,000 for singles.
Funny how rich just got shifted down to $70k. Only took a couple of weeks.
He'll keep a straight face. Just watch. Fargin bullshitter.
I just realized that we're trying to spend 1 trillion dollars without benefiting anyone. We don't want to give to the banks, we don't want to give it to the failing auto industry, we don't want to give it to the poor or poverty stricken, we don't want to put it into our deferred maintenance infrastructure, we don't want to give it to the states, we don't want to give it to . . .
Time to get in the sign/banner business.
Do you know how many realtors(R) and banks will tell us about the $15,000 tax credit? Signs, advertising, radio, news, etc, etc.
I will be surprised if it's not on google's home page in two weeks.
Reading predictions about Geithner's speech on Monday, I get the impression the gov't may try to get private investors to purchase toxic assets from banks by providing down-side protection, courtesy of the taxpayer of course.
Here's my question for the group: have there been any analysis/studies/projections for what it would cost to underwrite puts on housing?
It seems reasonable to consider putting a floor under each homebuyer for a certain number of years rather than trying to determine how to insure against losses in the sort of mystery-meat assets the banks are holding right now.
...did I read that right?...as saying it could be several years before a median income person could see the full $15K? How does this help me buy a house? How does this help me come up with a downpayment or pay closing costs if I don't get the full amount for possibly several years?
More details:
Blogger: Blog not found
Danny
yeah baby,shadow inventory floods the market, prices plummet even further
.....this whole thing reminds me of feeding my chickens. I'll throw a handful of corn on the ground and wait for them to scamper over to it. Then I'll throw another handful twenty feet away from the first handful, and they'll scamper over to it. I'll keep doing this and doing this and they keep moving from small pile to small pile. It's kinda fun - I wonder if Obama gets the same kinda kick outta making you people run around like a bunch of dumb-ass chickens too?
the question of nationalizing banks is like healthcare reform:
it is not a technical issue. we have models of how to do it. the problem is making it politically viable and the only way to do that is to make it necessary.
for health care that means a raging crisis. got that, pretty much.
for banks we have the crisis, too, but it still needs to sink its teeth in deeply enough so that the bleeding body politic will decide that it must take necessary measures to save itself. until then no one could pull off nationalization - not FDR, not George Washington, not Chance the Gardener, no one. Bank failure has to be fully exposed.
we don't want to give it to . . .
sdtfs
get the velocity above 1, that's all
what if the govt tries to lure in private investors for bad assets and none buy?
then we go to next steps, which would be???? recognizing the valuelessness of the assets and the bankruptcy of the banks?
these might be necessary steps to get to nationalizatio
You can't trade houses with your brother and each pocket 15k unless you actually switch houses and live there for 2 years. you'll probably have to prove residency with bills and things.
it still needs to sink its teeth in deeply enough so that the bleeding body politic will decide that it must take necessary measures to save itself
Totally agree. I suspect the leaders on both sides of the aisle know that nationalizarion is coming, but need a disaster to sell it to the masses.
"I wonder if Obama gets the same kinda kick outta making you people run around like a bunch of dumb-ass chickens too?"
Too clever for your own good, Black Star: I'm circulating a petition to put you on the ballot.
You'll like D.C.
Plus, you can use your Congressional franking privileges to keep in touch with us little folk.
""Why are we trying to artificially increase the turnover rate?""
Turnover is what is missing in the act of buying and selling. Maybe the turnover will infuse confidence, not fear. BTW, there is turnover at Kuhane, Stearn and others(possibly behind reits).
""And why are we targeting a tax credit at higher income individuals?""
Because the median inventory has been baking in the sun to long. The mid to upper buyer needs a nudge to let go of their humble abodes. Paving way for more turnover.
""This tax credit seems ill-conceived, and probably should be removed from the stimulus package. No one has adequately explained how this helps "fix housing first""
Because as one said, the rich maintain the wealth curve at Kuhane, Stearn and others. The longer the delay to address existing inventory the longer we get to fear the inflation factor. They a greed to let the steam out slowly...someone mentioned a soft landing about a year ago..."we should prepare for a soft landing in the housing market...c'mon man!" This is the soft landing that was/is being orchestrated...like it or not... This is what we get.
Blackstar
I remember feeding chickens and throwing it on one side of chicken wire. They were on the other side, a gate was 3 feet away. They could not figure out that they were supposed to around the wire, and through the gate. I had to throw feed by the gate, then on the other side.
Somewhere in this is an analogy to the topic.
The Latest from Denninger:
The Swindle Continues....
"Clearly this favors higher income tax payers as compared to the current $7,500 tax credit."
I think it earlier excluded high income buyers, now it includes every one.
It may motivate me to buy a home this year end as opposed to next year. As a good part of loss in value of the home in the first year of ownership may be offset by the tax credit.
The auto tax credit is absurd. You spend 45K on a new BMW to save a few hundred dollars on your tax bill?
No thanks. I will keep my acura.
a chicken in every tax credit?
This tax credit does nothing but support realtors. It does nothing to "fix" the market. The NAR has way too much power.
The reason it only helps realtors is that it brings no new buyers into the market. First time buyers can't afford these prices, even with the credit (which won't help them get the exotic loans they need)
" This is the soft landing that was/is being orchestrated"
we'll see - i think most of the folks suckered into paying over 400/500K for houses which quickly reverted to their natural state at 200K have been too embarrassed (and aren't aggressively literate for the most part) to flood the intertubes and media with their whines...
not so as the suburban set on the coasts sees values go from 800K+ as of a year ago back under the jumbo line. this year won't feel 'soft' at all, even as the median doesn't seem to be accelerating to the downside due to the low-end becoming 'stable' at
"The auto tax credit is absurd. You spend 45K on a new BMW to save a few hundred dollars on your tax bill?"
Would you spend 150K and up (not including taxes, interest and maintenance) on a new house to save 15K on your tax bill?
"It may motivate me to buy a home this year end as opposed to next year."
Right and prices WILL fall more...slowly and as intended...watch closely.
Upper buyers don't just take a $15k offset and smile...c'mon man! They will take $15k and parlay it into a $100k, right?
First time buyers can't afford these prices, even with the credit
First time buyers qualify for the very relaxed FHA standards; still not the same as 2006 exotics, but much better than standard conventional loans right now.
both residential tax credits could only apply to people who could buy a house, which these days requires a down payment and a job sufficient to pay the mortgage.
that rules out the poor, the unemployed, the underemployed, and much or most of what remains of the working class. it rules out a good slice of the middle class, too.
thus the tax credits target middle income and up. even the existing $7500 credit with its income cap still targets middle income and up, up to a point.
it is very bad policy to redistribute to the well to do. bad in general, worse in a depression.
money to the well to do goes into savings and brie.
money to poor and low income gets spent on milk and bread for the most part - used 100%, rapidly, and a greater portion for domestically produced goods and services.
Have you ever hypnotized a chicken? They look just like that SEC lawyer that Ackerman eviscerated the other day.
I don't this this credit will make the least bit of difference in the Miami-Dade County area. Oh, ok, somebody who was on the fence may bite, but we're down 40% with another 10% to go. At least. And my smart client is buying at 46% off peak.
So the mkt goes down 54% instead of 56%. BFD.
First time buyers qualify for the very relaxed FHA standards
not on the coasts, where first-time buyers are still looking at jumbo prices.
I have a feeling Timmy will sell to private investors with a government backstop. DO NOT WANT.
So go buy a $500,000 house and get $15,000 rebate. Then over the next 5 years loose 20% of the homes value and you are only in the hole $85,000.
I think I'm turning Japanese. I really think so.
Basically after buying a house how long would it take for a median income person to see this money?
The FHAs I close--and there is nothing else--at least have a mark to market appraisal.
Sorry, I meant 53.5% off peak. Stupid math.
For $30K, I don't think that'd be a problem...
Seriously, this has got to be the dumbest way to spend money I've ever heard of. The Repubs may be out of power, but their financial brilliance lives on...
.
soft refers to the balance in inventory, not the people...they will feel like the overpass was lowered to three feet in one day.
this may be the beginning a trickle down policy...sneaky.
All it will do is pull up a little demand for a year followed by an even larger crash. It will also lead to a lot of house trading fraud between friends.
Unforeseen consequence we may find out how much pent up demand to sell there is. Can you say huge increase in inventory as soon as this is passed.
It will also lead to a lot of house trading fraud between friends.
sequoia | 02.07.09 - 4:06 pm | #
Yeah, the fraud is only profitable if you avoid the realtor's cut.
The 1 million square- foot tower at 250 West 55th St. and Eighth Avenue was scheduled for completion in 2011.
Anonymous | 02.07.09 - 3:14 pm | #
Et tu, Mort Zuckerman?
Nice analysis, CR. Lieberman and Isakson should be set afire and catapulted into the sea. Or maybe trebucheted (sp) out onto the rocky shoals.
I would like to see an enactment of "The Eight Chained Ourangoutangs" starring Holy Joe, Jonny Isakson, Eric Cantor, Lindsay Graham, Ben Nelson, Grover Norquist, Rush Limbaugh and Mitch McConnell (or his body double Steve Forbes). The role of Hop-frog could be played by Robert Reich.
"And my smart client is buying at 46% off peak."
And, that's because someone else's smart client bought at 70% off peak before you, created an opening for the unthinkable...absorption?????
Soft landing folks, fear of inflation and a return to the american dream.
If REO sales were subsidized by $15K each, that would at least have a multiplier effect on the mark-to-market valuation of the entire REO inventory. Maybe this is the intent? If so, it won't be very efficient.
Yeah, the fraud is only profitable if you avoid the realtor's cut.
sdtfs | 02.07.09 - 4:08 pm | #
And besides, no ethical realtor would be a party to such an obvious fraud.
Every baby boomer in the northeast looking to go south will try to take advantage of this program. The massive exit from NY, NJ will double causing property values to drop 10 to 20 percentage points. NJ and NY have held up better than most of the country. This will help charlotte N.C. but be a negative for the Northeast.
"The FHAs I close--and there is nothing else-"
cash is else?
I think that CR and many commenters are missing the point.
Very little of the spending is actually about boosting the economy, just look at what the CBO wrote to Senator Gregg:
"In contrast to its positive near-term macroeconomic effects, the Senate legislation would reduce output slightly in the long run, CBO estimates, as would other similar proposals."
http://www.cbo.gov/ftpdocs/96xx/doc9619/Gregg.pdf
The point isn't whether the $15,000 tax credit accomplishes anything that's economically productive; the question is whether or not it buys reelection votes for Congressmen and women. And it will. Think of it as a $46 billion VALIUM PILL for stressed out homeowners, courtesy of the American taxpayer.
sdtfs writes:
It will also lead to a lot of house trading fraud between friends.
sequoia | 02.07.09 - 4:06 pm | #
Yeah, the fraud is only profitable if you avoid the realtor's cut.
What is 6% of $250000? $15000 exactly!
Why can't they just give people $15K at closing?
The comparison of real estate values today and tulip bulbs a few hundred years ago is not without merit. Tell me again how that tulip thingy ended.
Seriously, this has got to be the dumbest way to spend money I've ever heard of. The Repubs may be out of power, but their financial brilliance lives on...
Politically, this is a no-brainer for the Republicans because the credit doesn't induce observable government stupidity; individuals, yes, but not the government. On the other hand, direct government spending puts a big bulls-eye on the incumbent party.
We saw it with the no-contract Iraq bidding. We saw it with the crappy armor made for the soldiers. In spending programs this massive, it's impossible to weed out of the mis-allocated spending; they may be small percentage wise, but will make huge political capital.
So in a couple of years, no one is going to care about this amendment, but we'll be sure to see the waste when it comes to public education or rural FiOS. Political gamesmanship at its finest. Plus "bridges to nowhere" make great talking points.
Nice analysis, CR. Lieberman and Isakson should be set afire and catapulted into the sea. Or maybe trebucheted (sp) out onto the rocky shoals.
Gary | 02.07.09 - 4:10 pm | #
Now is this the vacationing Gary that half of us hate and the other half, uh...., don't hate? Or is this the poor innocent who doesn't realize what he's letting himself in for by using that handle?
We have been renting for almost three years and have the money for a 20% downpayment. We do not need a tax credit (at taxpayers expense) to buy a house. WE NEED LOWER PRICES! No way am I buying in the next year.
Basically after buying a house how long would it take for a median income person to see this money?
Mr. Randy Middleclass
Next filing year. But you're capped at what you owe in taxes. If you got a refund due, no $15k credit
After year, this will be extended for another year, and another and then eventually made permanent. After all, to take it away would cause housing prices to fall, and we can't have that!
Does anybody know how much in contributions the National Association of Realtors is giving to Isakson and Lieberman?
This is a travesty.
a good reminder from Matt Yglesias about the history of stimulus discussions going into the ancient past of early 2008:
Matthew Yglesias » Time is Not on Our Side
Time is Not on Our Side
When you see conservative complaining that the stimulus bill is too expensive and wont be fast-acting enough, keep in mind that had they not blocked stimulus last year on the grounds that it was too slow and expensive, we probably wouldnt be in a position today where we need such a large fiscal expansion. The further down the spiral you go, the more aggressive you need to get to reverse the vicious cycle and the bigger the threat that eventual recovery will be accompanied by inflation.
It may be ill conceived - but I've had a house on the market in flyover country listed at a little over $100,000 for several months.
There was no housing bubble in my town. For me this is even better than a free pony. But CR is right, it won't do anything to stimulate the economy.
"Does anybody know how much in contributions the National Association of Realtors is giving to Isakson and Lieberman?"
Just enough to get a tee time at the buick open...how ironic.
Next filing year. But you're capped at what you owe in taxes. If you got a refund due, no $15k credit
Anonymous | 02.07.09 - 4:17 pm | #
Not true.
The issue is not whether you are due a refund on withholding you paid during the year. The issue is whether you owed taxes for the year, overall (not just at the April 15 deadline). You could get all your withheld taxes returned. That is the limit.
Just because the tax credit is a stupid idea on multiple levels is no reason to get its provisions wrong.
Isakson is a relitter. He was President of Northside Realty in Atlanta immediately prior to being elected to the Senate.
So, no surprise there.
Comrade Terry | 02.07.09 - 3:11 pm | #
That and Joe [worst senator of all time] Lieberman as co-sponsor. 'Splains everything.
"Would you spend 150K and up (not including taxes, interest and maintenance) on a new house to save 15K on your tax bill?"
It might just make sense to buy in Dallas or South West Florida, where you can buy a decent house for 150K.
Yeah, I don't mine replacing my rent payment with a mortgage payment, provided they are comparable.
Check out this listing in Dallas
6826 Christina Ln, Garland, TX 75043 - Zillow
15K down, approx $1100 in monthly expense. Looks cheaper than renting a comparable apartment.
It be even better in Cape Coral, FL.
1823 El Dorado Blvd N, Cape Coral, FL 33993 - Zillow
Just because the tax credit is a stupid idea on multiple levels is no reason to get its provisions wrong.
joe shmoe
Sorry Joe, I was wrong, you is right
joe shmoe writes:
"thus the tax credits target middle income and up. even the existing $7500 credit with its income cap still targets middle income and up, up to a point."
Erm, if you're not middle income or up, what are you doing buying a house in the first place? Isn't that what got us into the housing bubble in the first place: people buying houses that they could not afford?
Remember; middle income is something like $40K / year. That doesn't leave much room for PITI on a house.
Anon,
meant it snarkily with Lieberman and his Repub friends in mind, not you, of course.
Or is this the poor innocent who doesn't realize what he's letting himself in for by using that handle?
sdtfs | 02.07.09 - 4:17 pm | #
You mean you can't tell?
I've tried to warn that poor soul.
Oh, and vacation doesn't start until tomorrow.
Does anybody know how much in contributions the National Association of Realtors is giving to Isakson and Lieberman?
Dan | 02.07.09 - 4:17 pm | #
Isakson is a reliiter, Dan. I would think that the NRA might send him more than a pittance.
Conjure works for the IMF?
CR is right on as usual. The only advantage I see is to a cash buyer who can handle the transaction with out a mortgage. Benefit to the economy is just musical chairs and some commissions. What does the taxpayer get? A bill for more stupid spending. Well done DC folks!
Q: Why are we trying to artificially increase the turnover rate?
A: So that everybody who collects fees on real estate transactions ("rents") can hold onto their business model a bit longer.
Q: And why are we targeting a tax credit at higher income individuals?
A: Because the rich are "entitled" to more money, through the agency of bipartisan consensus on the part of our kleptocracy.
This has been another edition of simple answers to simple questions.
Lucifer writes:
"Conjure works for the IMF?"
I'm guessing he consults behind the scenes.
Won't future tax increases just offset the 15% credit?
Maybe that's too simplistic, but there's no way Obama isn't raising taxes in 2-3 years.
"We have been renting for almost three years and have the money for a 20% downpayment."
What might also happen is an unintended decreased in personal spending by the only remaining people who are the ones holding up the economy (ie: renters), who come off the sidelines to bite on this to buy REO's & short sales and also become miserly. Thus, we are digging a deeper hole in GDP.
lambert strether writes:
"Q: And why are we targeting a tax credit at higher income individuals?"
A: Because they are the only ones that can afford to buy houses.
Remember, they are trying to prop up housing prices here.
W/O reading prior comments, some of my own...
(Kick the can.)
Hey.. Quick question? Have any of you used the DELL mini 9 netbook. I am tempted to buy it to read CR and other blogs from Cofee shops. I have a good laptop but it is a bit slow to setup.
I can buy a DELL 9 netbook for $299.
Q: Why are we trying to artificially increase the turnover rate?
Wouldn't turnover indicate that the gridlock was de-iced and money was flowing through a bank...something the first passage was to do?
Does anyone with half a functioning brain still doubts that the US is under the absolute domination of an elite that does not identify with its subjects?
A hostile and estranged elite that despite its overwhelming wealth, still sees themselves as outsiders?
Just another bailout to get the sheeple off the fence to buy overpriced homes. In my little town of Eureka, California, realtors are already salivating over this...even though most people who buy here are speculators. Still, there are significant numbers of trust fund babies whose parents will want the kiddies to pull the trigger based off this credit. Get $15,000 back...then watch the house value go down $150,000. Then walk away and leave the mess for the bank.
Any questions?
Lucifer writes:
"I can buy a DELL 9 netbook for $299."
If the price is not too much, you might want to take a look at the low-end Apples before you buy the Dell.
Since you can't run serious programs on a netbook anyway due to lack of resources, it might be worth considering alternatives.
Why not use the billions spent in housing credits to kill and bury realtors? Now that is change I can believe in.
No Ghost,they are the Insiders...
Lucifer writes:
"Why not use the billions spent in housing credits to kill and bury realtors?"
We're running out of land for graveyards...
Why can't they just give people $15K at closing?
Mr. Randy Middleclass | 02.07.09 - 4:15 pm | #
Why can't they just give everyone $15,000 and call it good.
So if you close on a house the day after this bill gets signed into law, you get the credit? They better pass this fast or a lot of people are going to wait to buy...
I believe it would apply to any purchase after Dec 31, 2008
The more that I think about it, this bill is a bit of a Catch-22.
If you live in an expensive area like SoCal, $15K is a very small percentage of the price of a house. The risk of depreciation over the next year is much greater than $15K.
If you live in an area where houses cost less, and $15K is a significant percentage of the price, you probably don't pay enough taxes to be able to utilize the credit.
We need to be more open to these different ideas. It's a confidence game. All sorts of stimulus and tax incentives are designed to loosen your wallet and improve your outlook.
It only works if we think it will.
Given that the commenters here are typically pessimistic (to say the least) we might all be doomed to a death spiral.
So hey, if you are in a death spiral anyway, why not have fun on the way down? Go shopping! Oh wait - we tried that once.
Rich people! Go Shopping!
Poor people, save every penny.
If we can't rely on the rich to shop when things are tough, what good are they? We might as well seize their assets and string 'em up!
Just kidding.
I already have a dual core centrino- less than a year old. I just want something to read the web, email and edit documents etc on the fly.
Something that boots up in less than 30 seconds and can be held in your lap with the same ease as an average book.
According to my calculations, $35.5B at a maximum of $15K per house would mean that about 2.6M homes are sold. So, I'm guess that "cost" includes things like financing the deficit gap...
"Why not use the billions spent in housing credits to kill and bury realtors? Now that is change I can believe in."
It's happening. Quicker than the correction. There are union translators left on scene to help with the carnage. Fact is they thought that the consumer was kidding when they took the RE remote from them. no kidding now.
My apologies if this has been discussed. From Bloomberg:
The Treasury may increase its stake in lenders that are judged short of capital, the people said on condition of anonymity. Should extra taxpayer funds result in majority ownership by the government, officials would then decide whether to liquidate the institutions, place them into receivership or retire the companies assets over time, they said.
Creeping towards nationalization?
We might as well seize their assets and string 'em up!
increasing the death tax has a similar effect, but without the gruesomeness.
Lucifer writes:
"Something that boots up in less than 30 seconds and can be held in your lap with the same ease as an average book."
I wonder if a Kindle would work for you.
It uses cell phone wireless technology, so you don't even need a hotspot.
Creeping towards nationalization?
mattdog
Bridge bank. It's all in the terminology
go with the ASUS or Acer netbooks, unless you want Dell's "vaunted" customer servicer.
I already use an iPhone and also have an itouch.
I am using my iphone to post this message right now from a Starbucks.
Buy bulk REO today at a steep discount knowing you have a $15,000 built-in net profit margin return in 6 months when you flip the home to a "soon to be" primary homeowner? Compliments of the taxpayers?
What am I missing?
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It's not nationalization any more than the banks the FDIC seizes every Friday afternoon constitutes nationalization.
cc writes:
"What am I missing?"
It has to be your primary residence.
Prices will fall faster than you can flip out.
the NRA might send
Comrade Terry | 02.07.09 - 4:26 pm | #
NAR, obviously.
Maybe the NRA does, too - but that's not relevant.
Anonymous,
The good news is that I can understand a few indian languages. I have also noticed that being indian improves the quality of consumer support, unless you start behaving like a prick.
Dumb question here, if I buy a house and the $15K credit reduces my tax to zero, do I then have to pay Alternative Minimum Tax?
Ed - Mtn View writes:
"Dumb question here, if I buy a house and the $15K credit reduces my tax to zero, do I then have to pay Alternative Minimum Tax?"
That would make it Catch-33...
It has to be your primary residence.
Really? didn't the last couple of years just check the box owner occupied. Problem solved. This whole deal plays the same game that just took us down. NO buying assistance programs and real down payments with qualified borrowers please.
"Buy bulk REO today at a steep discount knowing you have a $15,000 built-in net profit margin return in 6 months when you flip the home to a "soon to be" primary homeowner? Compliments of the taxpayers?"
You didn't miss. Good one!!!
When the pipe slows for the bulk investors, then you need a push. Wow, that asset manager going to be busy this week!
70% off sale
+Take another 10% or $15k off at the register.
stay on the fence.
We currently rent in a Seattle suburb (home of msft). Average house sells for 600K, a $15,000 tax credit amounts to only a 2.5% reduction in price. Hardly a motivating factor...
Our current rent is $2,800/m for a 3000 sqft property, still 20-25% less than equivalent PITI... You do the math!
Yeah take out funding of refurbish govt buildings and schools to make them more energy efficent, and put in a rank effort to try to prop up overvalued prices of a huge market. And the GOP claims that they are trying to get a better more effective bill. No it seems like they are trying to do everything in their power to make it less effective, yet just as costly. Why would they do that? So the economy is still in the pits come mid terms (probably will be anyways, but with a good bill just bad, not apocoliptically awful) and even still bad in 2012. Obama's going to own this, so it is in the GOP interest to make sure it does not work.
The one good point the GOP has made is the buy US provisions, which could set off trade wars, further reduce world trade etc. And it is not like we are the only economy stimulating. If we were alone in doing it, there would be a case for a buy US provision, albeit a very weak one.
AMT kicks in if you have too many deductions. This is a credit against whatever tax you owe, right?
Economist Moe Howard 3SU writes:
"Really? didn't the last couple of years just check the box owner occupied. "
This would be pretty easy to catch when your 1040 claimed a dozen "primary residences."
This would be pretty easy to catch when your 1040 claimed a dozen "primary residences."
sm_landlord
Considering many have not played buy the rules I have a hard time thinking a lion can chance their spots that easy. The new scam will be played. Locks only keep honest people out. How would it play if my 1040 claimed my current residence as primary and I state my old home will now be my second or a rental? I doubt they will bed check anybody.
Our current rent is $2,800/m for a 3000 sqft property, still 20-25% less than equivalent PITI... You do the math!
\t
notsofastfriend | 02.07.09 - 4:49 pm | #
I'm thinking 5 months of free mortgage payments. As long as we are close to the bottom pricewise it's tempting.
Ok, I'm convinced: it's a stupid credit. But I'm still likely to take it.
Ok, I'm convinced: it's a stupid credit. But I'm still likely to take it.
\t
Gee, Your Bank Smells Terrific | 02.07.09 - 4:59 pm | #
Color me Republican!
This would be pretty easy to catch when your 1040 claimed a dozen "primary residences."
sm_landlord | Homepage | 02.07.09 - 4:50 pm | #
Oh, hell - just file a dozen 1040s!
sm_landlord writes:
lambert strether writes:
"Q: And why are we targeting a tax credit at higher income individuals?"
A: Because they are the only ones that can afford to buy houses.
Remember, they are trying to prop up housing prices here.
And the problems with that are:
1) it won't work
2) if it could work it would be a bad idea.
3) housing prices should not be propped up directly because that transfers wealth upwards and that is especially bad in a depression
4) at most housing prices should be aimed at indirectly by stimulating jobs so more people have incomes, and by supporting better incomes via tax policy and more labor friendly policies
Shake the tree.
More price correction in NE.
I bet all the primary home recipients fall from the NE and land in sunshine or near the water, not Seattle.
This is obviously a terrible idea, but as one who is looking to buy now, I can't complain. My wife and I are high income (though I have six figures in student loans from law school), so we'll get the full $15k back if we do close this year.
It's not much, but as one who has been renting for ten years and watched the housing boom pass him by, and whose tens of thousands of dollars in federal taxes each year have paid for very little that actually benefits him, is it wrong to be happy about this?
js esq, I'm in the same boat. But now someone pointed out that if this puts me in the position of having to pay AMT--which thus far I've avoided--then it's not a win. Maybe the real plan was stimulate accountants/tax planning businesses?
Yeah take out funding of refurbish govt buildings and schools to make them more energy efficent, and put in a rank effort to try to prop up overvalued prices of a huge market. And the GOP claims that they are trying to get a better more effective bill. No it seems like they are trying to do everything in their power to make it less effective, yet just as costly. Why would they do that? So the economy is still in the pits come mid terms (probably will be anyways, but with a good bill just bad, not apocoliptically awful) and even still bad in 2012. Obama's going to own this, so it is in the GOP interest to make sure it does not work.
Dirk | 02.07.09 - 4:50 pm | #
Dirk - the Dems ought to take the bill they really want to the floor and make the GOP kill it if thjey have the balls. Make them really filibuster - not pretend filibuster - even if the debate goes around the clock for weeks with nothing else getting done.
I'd pay money to watch that spectacle.
It shouldn't affect AMT, because AMT's about excess deductions - this is a credit.
Dryfly
I think we will get that filibuster-political-suicide show coming to the national stage fairly soon. I think Obama's style is to extend an open hand long enough to let opponents completely choke themselves on their own bile.
As folks on this board know when it comes to finance, timing is everything.
Same is true in politics, but in that realm so many folks on this board expect instant action, 24/7. Wish it could be so, but it isn't. Strategies need to be set and played out over time.
...and, it wouldn't happen dryfly, they're all whores to the establishment.
...and, it wouldn't happen dryfly, they're all whores to the establishment.
Black Star Ranch
Maybe the money for the STD makes sense if they send it to the taxpayer for their loose actions.
Robert Prechter wrote that if the government wanted to prop up Jaguar sales it could cut the price of a Jaguar by 25% and everyone would rush out and buy Jaguars. After a while the stimulus will wear off. To prop up sales again they would have to cut prices to 50% off. This would raise sales a while but they would eventually fall as everyone would have a Jaguar. At that point the government would virtually need to give Jaguars away. Eventually even at free everyone runs out of a place to put them.
Escaping discriminatory redistribution, (i.e., tax schemes, regulatory policies, economic programs, etc. that distribute resources away to another area, especially in an undemocratic fashion).
Enhanced efficiency when the state or empire becomes too large to administer efficiently.
...........two allowable reasons for state secession from the union. Why is it we need Washington again?
It shouldn't affect AMT, because AMT's about excess deductions - this is a credit.
\t
js esq. | 02.07.09 - 5:17 pm | #
I'll double-check with my accountant, but that's my take on it
JimPortlandOR writes:
You can't be bi-partisan with a rabid dog.
JimPortlandOR | 02.07.09 - 3:24 pm | #
Yep, Jim, and the rabid dogs are the demoKrat facists. I see bi-partisan for you means totalitarian.
Those of you looking for the $15k bonus for buying the house, remember every other buyer is after that bonus; that's who you'll be bidding against.
Although I hate agreeing with anybody here, I have to agree with CR that this doesn't look like it's going to have its intended effect. It appears as though the only people who will benefit are the people who were going to buy a house, anyway, and maybe not even them because the seller is incented to simply raise his asking price by $15,000.
I know that in my situation (already own a home) the tax credit wouldn't be enough to make me move to a different (better) place because $15,000 wouldn't even cover the real estate commissions to sell my current house. Maybe if it was $30,000.
I'm just wondering what kind of "trade-able" effects this will have. Remember in the last recession when Congress and the President passed a tax credit/deduction on trucks larger than a certain weight limit (and who manufactured such vehicles)? People started buying Hummers and other large trucks/SUVs, gasoline prices rose, etc.
Just kicking it around.
Sebastia
We are putting my mom's home up for sale, not sure how much now, but probably close to 800k. It needs a lot of work.
She owns the home - and only pays a mimimal property tax.
She will attempt to buy a house at the same price in another area, close by.
What are the implications for a situation like this?
It seems to me that it will be a wash, in every way. Her house depriciated, but so have all the others. It seems to me that her situation is not affected by anything, since we're trying for an equal swap..
Although I hate agreeing with anybody here,
Isn't that an interesting admission.
If we can possibly get a 15g tax credit on a phat rv, i'll sign up. Will pay for the summer rental out west.
Hey, why wouldn't I wait for the 2010 $20K homebuyer tax credit? Or maybe the 2012 $30K homebuyer tax credit with special 2% interest rates on a 30 year fixed?
"And why are we targeting a tax credit at higher income individuals?"
Because high earners spend everything they make and low earners are savers by nature. I learned this almost verbatim from Larry Kudlow when he questioned why the last stimulus checks went to people with incomes under $150,000 instead of high earners.
"These people are just paying down debt. Why don't we give it to rich people? At least they spend it." is one brilliant observation Kudlow made.
Yep, I did close a cash condo for 40k. That hardly counts.
Sebastian writes:
"Although I hate agreeing with anybody here,"
And doesn't THAT tell a story?
CR, I think there are a lot of people like me who are waiting out the market because it is dropping so precipitously. I'm probably looking for an apartment in the 150K range, so this would be a 10% incentive for me. Say they also pass the 4% loans program. That's probably another 10-15% subsidy. These incentives are enough to get me to buy, while I would probably wait another couple of years otherwise.
According the graphs you always show, real estate needs to drop another 20-25% or so before it returns to historical levels vis-a-vis rents and income. These program would -- yes, artificially -- get us to that level, so that real estate prices won't keep diving, causing foreclosures and more bank paper losses. Once the programs disappear, yes, prices are likely to start sinking again, but I think the thinking is that if we get the rest of the economy going again, then we can handle a weak housing market.
You might ask, how much good would this program do if it's just for one year? Not much, but obviously, it wouldn't be in the public interest to let buyers like me think that they've got time to dawdle. The program can be renewed, if it is seen as helping.
Finally, I wouldn't think of this as a stimulus item. I'd think of it as an aspirin for financial crisis flu... something to alleviate the symptoms until the worst passes.
I'd think of it as an aspirin for financial crisis flu... something to alleviate the symptoms until the worst passes.
Wagster | 02.07.09 - 7:03 pm |
Expensive aspirin.
Expensive aspirin.
lama | 02.07.09 - 7:05 pm |
I can't pretend to be able to do the math, but maybe paying for lots of $15K subsidies turns out to be cheaper for the taxpayer than picking up the tab for many, many jingle mails.
But I share your concern. And I worry about what the exit strategy is. My fear is that this will be like the mortgage interest deduction... something that distorts the market and is politically impossible to get rid of.
And why are we targeting a tax credit at higher income individuals?
Because they bought and paid for the political power. Why else does the GOP exist?
A bit politically naive CR and I'm a bit surprised.
Jim
The NYtimes on foreclosure, joblessness, and food pantry lines in Fort Myers, Florida. Highlights a development called LeHigh Acres where prices are off 80% from peak.
Florida's Crossroads of Foreclosure and Despair - NY Times
Anyone that recently bought a new home has to feel like a douche courtesy of the USG
This tax credit would get my attention as a potential home buyer currently on the sidelines. Renting now at rates FAR below what it costs to purchase, with prices in desirable areas not falling much further, leaving the townhouse rental to home ownership (again) and claiming the 15k credit in 2009, plus points and interest and state taxes..., will reduce a sizable chunk of my 35k+ Federal taxes. With AMT rollback I will pay significantly less Federal taxes.
Good deal but I'm not sure how that helps housing or the overall economy. I suspect tax revenues will take a hit and so in future years the Fed and IRS will have taken it back plus in taxes and inflation. But hey, let's take it two-years at a time--election cycle economics is fine with me!
Dean Baker says all spending is stimulus and many others agree. By the same sort of reasoning tax incentives are stimulus also. But stimulus is not always good even if it works. The Fed stimulated the housing industry (bubble) in 2001 and probably other speculative enterprises by cutting interest rates. Now the bubble(s) have popped and we have a really big recession. So of course the Fed has reduced interest rates to zero and Congress wants to subsidize house flipping.
One simple rule is that stimulus should not be aimed at production of things that are in abundant supply already.
Have you ever hypnotized a chicken? They look just like that SEC lawyer that Ackerman eviscerated the other day.
mattdog | 02.07.09 - 4:01 pm | #
I have. Just place them on their side with their beak pointed on a straight line or yardstick. They'll just stay there motionless for quite a while.
The 15k is suppose to generate sales on a vast level, the intent is to stabilze prices so the cdo market can come up for air.
correct that previous: The 15k ISNT
Of course if it helps the rich more than the poor these stupidos would like it. What is the US all about but screwing the poor and enriching the rich? We thought Obama might change this, but he won't or he can't. Unfairness is a American as racism. Both are deeply engrained, so deep they can't be eradicated. Face it, the US is a crummy society. Very.
Communist Russia and Eastern Europe before "liberation" were doubtless societies that were far more "fair" to everyone than is contemporary USA.
Let's see.....My mother-in-law owns a vacant house but lives with me. We switch houses in cash transactions to avoid commissions. We have different last names................
I should have the details worked out by tomorrow.
Anybody care to help?
,
The real cost is the continued subsidy of unliveable suburban communities. A better use for this kind of money would be to use it to seize vacant homes. Too much good farmland has been built over anyway.
The home buying credit is intended for first-time homebuyers. I think the home buying credit is not available to anyone who owned a house in the preceding three(?) years.
"Communist Russia and Eastern Europe before "liberation" were doubtless societies that were far more "fair" to everyone than is contemporary USA."
Yes. Everyone got an equal nothing.
Poverty was the shared norm.
Except for the 5% in the party, who got everything.
The likely cost of the homebuyer tax credit would be the number of first-time purchases times the average credit. The max credit is $15,000. The average credit will probably be closer to $12k. I would expect about 1.6 million first time purchases. So the cost should be about $19 billion.
Bulldoze.
Let me get this straight, I'm sitting on the sidelines renting right now. If this is signed into law and I go out and buy a house, which let's say qualifies me for the $15k, do I get a $15k check next year or simply pay $15k less in taxes?
To get the maximum credit you must buy a $150,000 house. The income needed to qualify for that would be about $35K to 40K. A person making that income would have annual federal income taxes of about $4,000. So they would not come close to getting the max benefit.
To get the max benefit (ovwer two years) one must have tax of $7,500 per year or more. That would require taxable income of about $55k, which would probably be a family with gross income of more than $75k.
A family with income of $75k can afford/qualify for a home priced at about $300,000 at today's interest rates.
Swampfox, You pay less in taxes. It is a credit against your income tax liability. It can be spread over two years if need be.
In times like these a tax credit like this means almost nothing, this will be great for those people who were moving anyway this year.
Totally agree with all your points CR.
The reality is though that the SP 500 is going to hit 600 this summer and my 630K home (which was about $800K) a few years back is going to 499K.
Anything is going to help at this point even that idiot Nancy Pelosi's idea's but let me tell you 3-5 years out armageddon is sure as sh it gonna be on our front doorstep.
Plan accordingly.
I wouldn't say the main problem is prices being too high anymore. Now the problem is that there just aren't enough people out there who have saved enough money to put down 20%.
What's really needed is a program that encourages wealthier people to become landlords, like a GSE program to buy up loans made for homes purchased to rent.
If I'm reading it right, this program is good for my situation. We're looking to move up and rent out our current house, so if we buy a new home we'll get the credit and keep our current home as a rental.
whew, I don't miss that haiku.
The housing prices need to go down just as college tuition needs to go down.
More tax credits and student loan availability will help neither.
The $15,000 is a joke. Anybody who makes enough to pay $15,000 in taxes, doesn't need it to buy a house OR knows the prices are going down, down down.
The US government is run by a bunch of snot nosed ignorant children.
As soon as this 800 Billion State Bailout Bill passes, the market will tank worse than anytime on record. WHY? Because investors will know the US government is broke and can't do anything more. It is over.
SELL. It is over.
How about a $15,000 tax credit for guns and ammo?
I can haz swedish piece prize?
The 1975 legislation also had demographics on its side. Baby boomers, the first ones of whom were about to turn 30, were about to flood the homebuying market.
Zephyr,
Thanks!
Isakson is from the Real Estate industry and this is simply a payback to all of his builder buds who financed his campaign and who are now broke. There are fewer more mealy mouthed jackasses in Congress than he.
He is a prime example of why the Republican Party is sinking faster than the Titanic at a time when it should be the ripple of a tsunami washing into the mid-term election cycle.
Unfortunately I live in Isakson's state (GA) so I am represented by this clown.
The primary residence requirement won't prevent fraud, as anyone can buy a second house, move in for a few months to do the fix up work, and keep sending the mail to the house while the renters move in. Just as long as you trust the renters not to open your mail, that is.
The IRS doesn't have the manpower to deal with this.
I'm a corporate lawyer working at a Midwest company. No layoffs anticipated at headquarters at the moment. Housing here is inexpensive (no bubble in flyover country), so $175,000 will buy a three bedroom 1920's era solid brick house in lovely condition located within a five minute walk to work. I'm single, no dependents and make approximately $150,000 a year. Imagine my surprise that with all the people hurting and out of work struggling to pay their bills, that fortunate me should be bestowed such a prize - mainly paid for by those earning less than a third of what I am fortunate enough to make. Time does not stale, nor custom wither, the infinite variety of inanity gushing forth from the GOP. I wish to thank the citizens of Georgia and Connecticut for electing the wise legislators who sponsored this amendment. I promise to spend a portion of the tax credit on orchids.
@bearly:
From one who voted for 'that one' - a question...as an official Bitter, + wonder what it is you prefer to cling to - Jeebus or your pistol?
Real estate commissions and mortgage and moving expenses are one reason why this credit may not prompt home owners to sell to gain the credit. This could be a way to make housing more affordable for first time home buyers. Not that this is necessarily a good use of government funds. I'm just saying.
My husband and I just opened Escrow and we would have bought the house with or without this credit. But we are happy about it because we are depleting so much of our emergency fund on termite fumigation, new carpet, lots of paint, as its an REO in need of serious TLC. We know we won't receive the credit until after filing our taxes in 2010 but it will really help us rebuild our emergency fund as it is about 5 months of mortgage payments for us.
But this does not help another couple we know who keeps getting outbid because they cannot afford to bid any higher. This does not help a buyer with their downpayment or qualifying for more loan.
This will not help anyone in 2009 unless they have their employer withold less through the year in anticipation of using the credit next year.
I think the purpose of this is more to help those who are buying in the down market to not default within the next year. Home prices will keep falling anyways.....
I thought the government is keeping interest rates lower than they would be otherwise.
If/when they stop doing this, rates will rise.
Rising rates will cause prices to fall.
If this is the case, why would anyone buy now?
What am I missing?
Existing homeowners put your unit up for rent and go buy a new one. Everyone else (non participants in RE) remain on the sidelines and wait for the real collapse in 2010. Got it!
FOR THOSE WHO BOUGHT IN JANUARY:
THE HOUSE PASSED THE BILL FOR A $7500 TAX CREDIT THAT DOESN'T NEED TO BE REPAID AND IS AFFECTIVE FOR PURCHASES OF HOMES AFTER 01/01/09.
THE SENATE CHANGED IT TO A $15,000 TAX CREDIT BUT IT IS ONLY AFFECTIVE FOR PEOPLE WHO PURCHASES AFTER IT'S SIGNED.
IF THE SENATE PASSES THERE'S TODAY, THEN THERE WILL BE A MEETING BETWEEN MEMBERS OF THE SENATE AND MEMBERS OF THE HOUSE TO WORK OUT THE DIFFERENCES BETWEEN THE 2 BILLS.
I BOUGHT IN JANUARY SO I OBVIOUSLY WANT THE $15,000 TAX CREDIT THE SENATE PROPOSED BUT WITH THE START DATE THE HOUSE PROPOSED.
YOU NEED TO MAKE YOUR VOICE HEARD AND CONTACT YOUR SENATORS AND HOUSE REPRESENTATIVE. THIS IS AMERICA SO YOUR VOICE IS YOUR POWER. E-MAIL THEM OR CALL THEM. HERE IS A CONVENIENT NUMBER. CALL AND ENTER YOU ZIP CODE AND IT WILL GET YOU IN CONTACT WITH ALL OF YOUR CONGRESSMEN. DECISIONS ARE BEING MADE, DO IT NOW. 1-866-924-NAHB (6242)
Looks like all the hoopla was a little premature. The stimulous is back down to $7500
Looks like home buyers may have to wave goodbye to $15,000 [Updated] | L.A. Land | Los Angeles Times