patrick.net

make it available to all home buyers

Would that include people buying rental property?

Why not pass a "Howeowners Equity Protection Act? The Act will remibuse a homeseller the difference between what the home seller paid for the house originally, and what he was able to sell it for. With 3% added per year, of course. For homes that exceed the 3% appreciation, the seller keeps all proceeds.

I heard Dodd may have trouble getting re-elected. Hope the same for Isakson.

HeadSet says

I heard Dodd may have trouble getting re-elected. Hope the same for Isakson.

Isakon's past profession was "Real Estate Executive" (bio here). So you know where he is coming from. I bet he is in touch with NAR everyday.

P2D2 says

Isakon’s past profession was “Real Estate Executive” (bio here). So you know where he is coming from. I bet he is in touch with NAR everyday.

Unfortunately, many others are in touch with the bankers every day.

$15,000 is more than most couples who earn 6 figures pay in federal income tax in an entire year (assuming no deductions, you'd need to earn about $110k before you hit that amount).

Constitutionalist says

Some Guy says

These people make me sick. If these numbskulls in government had kept their greedy paws out of the market, we probably would have already GOTTEN to the bottom, and would be on our way back up, except for real and not smoke and mirrors.

Would these be the SAME numbskulls you are now advocating are best suited to reform HEALTH CARE?
Pot: Meet Kettle.

Oh come on now, everyone knows that the people that the medical industry have bought and paid for are different from the people that the real estate industry have bought and paid for.

RE 15K Tax credit: Wouldn't most sellers with even a little savvy simply prorate their asking price accordingly?

I guess I never anticipated the lengths to which the government/NAR/banks/et al would go to reflate a lead balloon.

Never minding politicians for a second - I see a big part of the problem as concentrated self-interest. The principal of short term gain for long term pain is big these days. Even people who see the folly want their slice all the same.

Taxpayers are on the hook for all these high-fructose boondoggles, cheap mortgages and tax rebates, and the debit will come due at some point in our lifetimes - most likely collected through a new and creative tax (something along the lines of VAT, perhaps?) Unless wages/salaries make a quantum leap over the next decade, I don't see how the American standard of living can remain at anything even close to par.

This, from Charles Hugh Smith via Patrick.net:

"Few beyond historians know that half of all urban homes were in default/delinquency during the Great Depression of the 1930s. Various Federal schemes were put in place to suppress this national default: bans on foreclosures, renegotiating existing under-water loans, etc. None of them changed the fundamental reality or "fixed" the housing market. We would be wise to recall this history before placing too much faith in re-runs of the same policies. "

Excellent read, by the way.

There was actually talk of extending (and increasing) the credit a few months back. I don't agree with the credit on pricible, but I'd cerinaly take advantage of it. Heck, the current $8000 credit at least got me seriosul looking (at bying my first home) again. If they up it that much... it's a pretty big carrot.

A few quick thoughts:
1) My buddy (who works in real estate) was expression concern about what happens to the housing market once the credit expires

2) A different friend of mine bought in 2008 using the first "credit". (which was more like a loan that needed to be paid back over time). Now they may have to sell, and are concerned that they would be on the hook to pay back that money in one fell swoop. The bottom line is the government's changing the rules of the game every six to eight months always will screw someone, to someone else's benefit.

3) My market is at a "perceived" bottom. I say perceived because a) people have been paying so much for so long that a mortgage that sucks up 30% + of ones income seems "nomral" and b) the lower tranche of properties in my area are now affordable, relative to the incomes of the area. The problem is that they almost all have issues (tiny house, major repair, dangerous location, etc.) and 98% of them are vacant foreclosures. On the rare occasion a "diamond in the rough" hits the market, its gone before the general public even has the opportunity to see it.

4) If they do extend this credit and open it to all buyers, your going to see prices go up significantly, not to mention that if it is not retroactive, you will have a group of agitated first time fish that jumped into the pond this year.

If this 15K thing goes through how are the people who got suckered into the market with the 8K thing going to feel? And their house is now worth less than it was when they bought it?

Some Guy says

HeadSet says

P2D2 says

Isakon’s past profession was “Real Estate Executive” (bio here). So you know where he is coming from. I bet he is in touch with NAR everyday.

Unfortunately, many others are in touch with the bankers every day.

Yeah, like on their knees in front of them.

...and the most I ever got, on my BEST day, was dinner & a movie. I would'a preferred fifteen grand. I sincerely hope that they extend the credit to anyone who has refinanced in this year (I did, house payment now under $800/mo PITI). I'll enjoy parking my new car in the garage, and will wash my clothing in my new washer via cash for appliance programs. Scratch that one - I won't have to wash my clothes - I'll be rich from rebates & tax incentives! I'll throw away my clothes after I wear them (some people would say that's a good thing) and shall throw dollar bills out the window of my non-clunker in anticipation of cash for useless currency programs.

$15k to all buyers? This is a train wreck waiting to happen. Will the investors be able to get the payout too? How about those buying vacation homes? How about those buying rental properties? First time buyers are already getting squeezed out by investors. The $15k would ignite a new bubble. Sure, it'll buy votes now and may collapse on someone else's watch. This is another feel-good plan that's just going to hurt even worse when it's over. If the $8k is working then it should simply be extended as is and not increased.

How about we come up with a program to subsidize car purchases. too for around 1/2 of house credit ... oh wait

I'm actually okay with buying other people food and some basic medical care. Now that my money is going into buying people cars and new houses I've just lost it ... things have really begun to unwind into a strange fantasy land (congress) where we can spend all the money we want with no repercussions, ever ... or maybe five years, whichever comes first

Haha. Congress will probably pass this legislation, to the cheer and applause of all Dems.

zetabeos1 says

“RE 15K Tax credit: Wouldn’t most sellers with even a little savvy simply prorate their asking price accordingly?”

I do not think the sellers will be able to hike the price, since the buyers will not have an extra $15k cash in hand. If the $15k is allowed for down payment substitute, then we will have the price hikes. We have too many short-sighted folks who will buy as long as down payment is low or zero. Then it does not matter how overpriced the house is.

HeadSet says

zetabeos1 says

“RE 15K Tax credit: Wouldn’t most sellers with even a little savvy simply prorate their asking price accordingly?”

I do not think the sellers will be able to hike the price, since the buyers will not have an extra $15k cash in hand. If the $15k is allowed for down payment substitute, then we will have the price hikes. We have too many short-sighted folks who will buy as long as down payment is low or zero. Then it does not matter how overpriced the house is.

Well if it is extended to investors or non 1st time buyers, it will have a huge impact. But I agree that if the pool of people eligible for this hasn't changed, it'll do very little. Count on the effort being driven into widening the availability of the bribe.

Makes no sense to me. We cannot build an economy on the mortgage market. Or have we not learned that in the most painful way very recently?

God , why no body thinks of renters. We pay more taxes than these guys (Because of no deductions).

I don't get how 8K or even 15K could make any difference (it wouldn't cover even agent commission I guess). 60-year old foreclosed houses in middle-class areas cost 600K+ even in the East Bay and closer to Silicon Valley it's even worse. After a few years here I do not think anymore that 200K of annual family income or 2-software engineer couples is the local average in the area. So I figure it's my poor comprehension of economics that prevents me from making sense of this price level.

As a side note, it looks like the current administration made a political decision to cater to the masses. Thus do not look for economic rationale. Unfortunately elections matter in a democracy and people who will benefit from the largess clearly outnumber those of us who will be forced to pay for it. My expectation is that they will ruin the middle-class by burning their savings with inflation and/or forcing them to buy insanely priced ancient plywood boxes with looming higher taxes.

The $15k would ignite a new bubble. Sure, it’ll buy votes now and may collapse on someone else’s watch. This is another feel-good plan that’s just going to hurt even worse when it’s over. If the $8k is working then it should simply be extended as is and not increased.

I don't get what difference it makes? The 8K rebates were fucked enough. Whether it's five or eight or fifteen - it's insane. Why is government largess acceptable as long as we split the hair at a certain angle and width? It's okay to take 10 dollars out of my front pocket, but don't take the 15 dollars out of my back pocket.

If this kind of policy is the only cure, then it's worse than the disease.

By the way...since when is throwing money at a situation (more money than at any other time in history, by the way) considered a real solution and reason to rejoice - especially when it's funny paper?

Are they going to keep the $75k/$150k income cap?

Are they going to keep the $75k/$150k income cap?

Right...as long as we're giving away free money, how much sense does a cap make?

HeadSet says

zetabeos1 says

“RE 15K Tax credit: Wouldn’t most sellers with even a little savvy simply prorate their asking price accordingly?”

I do not think the sellers will be able to hike the price, since the buyers will not have an extra $15k cash in hand. If the $15k is allowed for down payment substitute, then we will have the price hikes. We have too many short-sighted folks who will buy as long as down payment is low or zero. Then it does not matter how overpriced the house is.

Well if it is extended to investors or non 1st time buyers, it will have a huge impact. But I agree that if the pool of people eligible for this hasn't changed, it'll do very little. Count on the effort being driven into widening the availability of the bribe.