Extending the $8,000 FTHB Tax Credit
by Evan Vanderwey on 29/09/09 at 8:02 pm
November 30 is the deadline for the $8,000 1st time home buyer tax credit, but what actually ends up happening on December 1st is, at this point, anyone’s guess. But for what it’s worth, I’ve linked an article I read yesterday that has a lot of the right people giving their opinions on the matter.
Article excerpt:
Senator Isakson believes lawmakers will eventually move to extend the credit in one form or another. “I don’t believe either this administration or the current leadership would look November 30 in the eye and let this thing die,” he says. White House spokesman Robert Gibbs said this week that the administration is evaluating the credit’s impact and will make a recommendation to the president, the Associated Press reported. The outlook for an extension appears to have brightened. Scott Talbott, a top lobbyist at the Financial Services Roundtable, put the odds of its extension at 50-50 earlier this week, but he said that the chances improved to 75-25 after Reid endorsed the six-month extension.
-Read the entire article here-
My two cents:
I am among what I hope is a growing number of people involved in the Real Estate Industry who are NOT in favor of the credit and “free money for some.” The reality is that $8000 given to a relative few will cost all of us much more than the estimated $100 billion it will end up having cost the US Government when this is all said and done.
Thinking logically:
1. The free market sets prices of homes.
2. The government gives $8000 to some people who buy some homes.
3. This has increased sales demand.
4. Any increase in demand, while it exists, will always increase prices (or slow price declines).
5. Next, the goverment does one of two things:
a) Ends the credit at some point. This will cause all housing values to drop by around $8000 more than they already are (even for those who just paid $8000 more for their home to get the credit). Or,
b) Continues to give credits to some people who buy homes – forever. This would be the only way to make sure that prices don’t adjust back to their former price; but then it would soon become “normal” and would no longer stimulate future home sales.
I think that (a.) will be their choice (at some point).
When the article says that they will be “evaluating the credit’s impact” they must be ignoring the greater impact of the total cost of the credit in their evaluation. The cost is greater than just paying back the money. The higher cost is the cost of entitling people.
Entitlement is something we’ve all felt already with respect to the credit already. After all, we think to ourselves: “they can’t take that away now?!”.
The cost of entitlement is devastating and should be avoided at every turn. Lets get it out of our thinking, out of our politicking, and out of our conversations with each other. It will kill our ability to think clearly.
The Facts are these:
1. Mid-Michigan is a great place to live and work.
2. Home prices around here are making it very easy and attractive to own a home.
3. There is a lot of expansion in the business, insurance, technology and education sectors that says we will be a growing region.
Whether or not the credit is extended, buying a home in Lansing right now is a very good idea for most people who are thinking about doing it.
