$15,000 Home Buyer Tax Credit Gets Another Boost

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  1

  Ilyce Glink

  08/24/09 | Report as spam

  RE: $15,000 Home Buyer Tax Credit Gets Another Boost

  From Brian on ActiveRain:
  
  Sounds great. And while we are at it, I propose a $100,000 tax credit to anyone who can draw a picture of a house, stick figures included of course. This is why the country is in such a pickle. Every special interest wants their own tax break, loophole, or handout. I am sure it would help sell some homes, but are you really wanting to bankrupt our country in the long run just to put a little more green in your pocket right now? Don't you care about America?

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  2

  Ilyce Glink

  08/24/09 | Report as spam

  RE: $15,000 Home Buyer Tax Credit Gets Another Boost

  From Cathy on Facebook:
  
  "A tax credit might really help jump start the housing market. It would be nice to do something positive for those who are not first time home buyers too. Everyone has suffered in this market. Ilyce, do you agree with this idea?"

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  3

  Ilyce Glink

  08/24/09 | Report as spam

  RE: $15,000 Home Buyer Tax Credit Gets Another Boost

  Cathy:
  
  I think it's a big fat band-aid that doesn't get to the heart of the problem - lack of jobs. Yes, people have suffered. And, yes, our houses are worth a lot less than we thought. But you can't build another bubble as a way to get out of this deep recession. So, while I think there would be short-term gain with a $15,000 tax credit, I don't think it's a good idea to continue to stoke returns now by borrowing from future demand.
  
  See more of my comments at How About A $15,000 Tax Credit For All Buyers Even Millionaires?
  
  

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  4

  ja1515

  08/24/09 | Report as spam

  RE: $15,000 Home Buyer Tax Credit Gets Another Boost

  What's going to stop the new home buyers who jump on a $15k tax credit from going into foreclosure after they lose their jobs? Let's take the money for a tax credit and put it toward job creation.

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  5

  Ilyce Glink

  08/24/09 | Report as spam

  RE: $15,000 Home Buyer Tax Credit Gets Another Boost

  Brian:
  
  I care deeply about this country. And, I was in favor of the original $8,000 tax credit (I was not in favor of the 2008 $7,500 tax credit that was really more like a zero-interest loan since it had to be paid back).
  
  But I think we're reaching a point of no return - not to mention diminishing returns. The Cash for Clunkers (a/k/a CARS) program will be a good flashpoint to see if there are any long-lasting benefits to a 3-week program than gave 450,000 taxpayers $4,500 to buy a new car.

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  6

  Ilyce Glink

  08/24/09 | Report as spam

  RE: $15,000 Home Buyer Tax Credit Gets Another Boost

  @JA1515:
  
  You're right - what if they go into foreclosure? You're supposed to live in the house as your primary residence for three years. If you don't, you're supposed to pay back the tax credit.
  
  Of course, if you're in foreclosure, you probably don't have the spare cash lying around to repay Uncle Sam. Maybe you could call California's IOU guy for assistance.
  
  Thanks for your comment.

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  7

  MarjWyatt

  08/24/09 | Report as spam

  RE: $15,000 Home Buyer Tax Credit Gets Another Boost

  I would love to see this pass so my daughter, who is a "now single" working mother, can leverage it to buy a home for herself and her 4 children.
  
  I become curious why, in these financially contentious times, our government isn't looking at ways assist those of us who are "post-war victims" of the real estate crash gain access to social security money from their own accounts to live now ... not in 5 or 10 years. It seems like every government initiative is targeted at people who have a J-O-B and very little help is offered to self-employed nearly-60-somethings who have more trouble competing in the J-O-B marketplace.
  
  Ok. Done ranting.

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  8

  Ilyce Glink

  08/24/09 | Report as spam

  RE: $15,000 Home Buyer Tax Credit Gets Another Boost

  @MarjWyatt:
  
  For a $15,000 tax credit, I might even move - and I love my neighbors.
  
  I can see how having the cash would help, but I wonder if your single working daughter should buy a home. There are times where it's a much smarter move to rent and save the cash.
  
  Homeownership comes along with a slew of housing expenses, including (but not limited to): property taxes, maintenance issues, water infiltration headaches, repairs, pest issues, and landscape and snow removal expenses.
  
  If your daughter can rent for a fraction of what she'd spend to buy, own and maintain a house, it doesn't make sense that she'd spend more when homes are unlikely to appreciate that quickly.
  
  Of course, if she gets an amazing foreclosure deal (although there's a feeding frenzy at the very bottom of the market in some locations at the moment), then it might be a good deal. But she'd still need to come up with 3.5 percent for an FHA loan.
  
  To your other point - I think if the government would allow 50-somethings to get Social Security checks now, the system would crash under its own weight in about 5 seconds. As it is, Social Security is underfunded - and will run out of money somewhere in the 2020s, I suspect - if not sooner.
  
  But job training, networking events and other assistance in finding a job would certainly be helpful - and welcome for folks in your age bracket. I recently did a Job Search Web Chat for the Fox News station in Chicago that may offer you some tips.
  
  Thanks for the rant I mean, comment. I hope it goes well for you and your daughter.

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  9

  amerhome

  08/24/09 | Report as spam

  RE: $15,000 Home Buyer Tax Credit Gets Another Boost

  We do need more jobs and more job retraining. The scary thing is that most economists are predicting a mostly jobless recovery whenever that recovery begins. The infrastructure stimulus funding will help when it kicks in, but it is dribbling out very slowly so far.
  The problem in the housing sector is that the surplus housing inventory - a product of earlier overbuilding and more recent job losses - is driving the value of all homes down further and further. This puts more homeowners underwater, stranding more of them in homes they can't sell because they don't have the cash to make up the difference. Their net worth continues to evaporate along with their home equity, and their ability to finance their retirement and/or their children's college education is disappearing along with it.
  The home buyers tax credit is a bandaid, no doubt about it. In this economy we need a lot of bandaids. The auto manufacturers just got theirs, and we should also help homeowners, most of whom never had anything to do with subprime loans and have been responsible and hardworking citizens throughout their lives.
  Bruce Hahn

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  10

  LWAG

  08/25/09 | Report as spam

  RE: $15,000 Home Buyer Tax Credit Gets Another Boost

  I would like for you all to consider this visualization that I sent to my representatives in Wisconsin and Sen. Isakson, Sen. Reid, and Sen. Dodd as well:
  
  "Passage of the bill could provide a near instantaneous boost to the crippled real estate and home building industry similar to the very popular rebate program for automobiles currently in consideration of expansion. The effect would be rapid and pronounced but would impact a much larger segment of the economy. You can borrow one of my visualizations if it helps. Imagine being in the center of a Lowes or Home Depot standing on a 12 foot ladder looking around at all of the many thousands of items sold there and then imagine, the millions of people that make, transport, sell, deliver, install, and fabricate them. That's how big the housing industry is. The positive impact on job creation would be felt in virtually every sector of the economy. In the case of existing home sales, it would put more loan officers, title company employees, real estate appraisers, real estate sales personnel, moving personnel, painters, furniture sales persons, cleaning personnel, (etc. etc.) back to work."
  
  
  
  

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  11

  Ilyce Glink

  08/26/09 | Report as spam

  RE: $15,000 Home Buyer Tax Credit Gets Another Boost

  @LWAG: Each home sale accounts for something like $67,000 in downstream boost to the economy.
  
  Part of that is carpeting, window treatments, new bed linen and whatever else people buy. And, part of it is commissions and the other costs of sale.
  
  There's no disputing that the real estate industry could use a boost. But for how long? And, who gets to benefit?
  
  I think that spending $8,000 to get someone to buy an $80,000 to $300,000 home with a $67,000 economic boost is a whole lot better than spending $4,500 to get someone to buy a $20,000 car. The ROI works better.
  
  But how long can you keep doing it? And, at what point, do you just have to let the real estate industry, banks, and market work through its own mess?
  
  Thanks for your comment.
  
  

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  12

  Ilyce Glink

  08/26/09 | Report as spam

  RE: $15,000 Home Buyer Tax Credit Gets Another Boost

  Bruce:
  
  I agree with you that excess inventory is a problem right now. It's a problem for developers, banks, and home sellers who might like to move on with their lives, but can't.
  
  But let's consider a jobless recovery - If unemployment surges past 10 percent (and it's way past that in many major metro areas, like Chicago - which is at 11.3 percent at the moment) through 2010, a jobless recovery will only prolong the pain.
  
  Eventually, you'll have a housing rebound. But if you get an extra 1 million buyers to purchase home this year, you'll have fewer buyers down the line, especially if interest rates rise. Are you saying you'd rather have people buy now and not later?
  
  As far as bandaids go - the $8,000 home buyer tax credit could be looked at as another bandaid for Wall Street - given that a huge chunk of home sales are of distressed or foreclosed properties. Yes, home buyers are given a check (or will get one when they file their tax return), but the banks have one less home to sell in their portfolio.
  
  I'm not saying get rid of the $8,000 tax credit. In fact, I think they'll have to extend it and maybe even expand it to all home buyers.
  
  But if you want a sustained recovery in housing, you have to find a way to put people back to work.
  
  Thanks for your comments.
  
  

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  13

  amerhome

  08/27/09 | Report as spam

  RE: $15,000 Home Buyer Tax Credit Gets Another Boost

  Ilyce-
  
  I totally agree that a sustained recovery requires putting people back to work. Until that happens and without intervention, home values will continue to drop. Dropping values will continue to gobble up all homeowners home equity/savings and put more and more homeowners underwater. That is not good.
  Any bandaid that would help stop or slow falling home values until a true sustained job-driven recovery gets underway is good for all homeowners. Reducing the housing inventory by making it more attractive for first time buyers to take the plunge, more people to buy second homes, or investors to expand their portfolio would help achieve that objective.
  You're also right that increased demand now means fewer buyers down the line. What the buyers tax credit bandaid would do is trade an otherwise continuing steep slide down a "V" shaped recession (or worse), for a flat line bridge across to the other side of the "V".. It will be a longer flat ride until employment growth becomes a primary driver of a housing recovery, but we think that's preferable to keeping hands off and finding out how many more people will lose their homes on the ride the rest of the way down a "V" shaped recession.

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  14

  Ilyce Glink

  08/27/09 | Report as spam

  RE: $15,000 Home Buyer Tax Credit Gets Another Boost

  Bruce:
  
  I don't disagree that doing nothing in this case is preferable to doing something. But, it's important to understand what we're borrowing against.
  
  Not every state is in the same predicament. Should the $8,000 first time home buyer tax credit be state-specific? Should it only apply to Arizona, Nevada, Florida, Georgia, Illinois and the other top 10 states for foreclosures?
  
  Agents would argue that most areas need a boost. I think lenders should have pressure put on them to do their part. I was sitting in a meeting with some of the leadership of the Atlanta Board of Realtors this morning, listening to one CEO discuss how she is losing 30 to 40 short sale deals per week because the banks are changing their minds at the last minute, thinking the price should be higher (a higher price isn't supported by the comps so the deal dies) or the second lien holder decides they're not getting anything, so they refuse to cooperate.
  
  I'm not saying it shouldn't happen - or that it won't. I also agree that if homes get sold it should better support neighborhood pricing.
  
  But if you don't stop foreclosures, and put people back to work, you'll be out of luck. There aren't enough home buyers to make up for that short fall.
  
  Thanks for your comment.

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  15

  Ilyce Glink

  08/30/09 | Report as spam

  RE: $15,000 Home Buyer Tax Credit Gets Another Boost

  From Dominick on the Active Rain Network:
  
  My sense is an extension and an increase in the tax credit is a big mistake. Did a blog too on the subject. What are the folks who can't really afford these homes going to do 2-5 years down the road? More foreclosures is my guess. Believe we need to go back to the way our grandparents did things...save up until you can afford all or most of it.
  
  With regards, Dominick

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  16

  Underwater 31

  09/08/09 | Report as spam

  RE: $15,000 Home Buyer Tax Credit Gets Another Boost

  Ilyce,
  
  I moved to Florida in 2003 for an employment oppurtunity directly out of college and planned to stay there 3-5 years. I saved down payment money and purchase a brand new home in December 2004. I purchased for $137,000 (cheaper than anyone else at the time) and I put 10% down. I took a $122,000 mortgage on a $50,000/yr salary.
  
  I was laid off in April 2007 and moved back to Ohio. I sucured new employment within 6 weeks at $45,000/yr. I have tried to sell my home continously for 2.5 years now. I owe $112,000 and the bpo is $55,000 (GMAC Mortgage). I'm underwater by about 60% of original purchase price and about 50% compared to what I owe ($57,000 underwater). I've never made a late payment. I've had the house rented off and on for $800/month (going rate) over the past two years, but that leaves me with a $400/month shortage (when rented). Carrying cost is $830 mortgage plus $370 HOA dues.
  
  Should I really be a slave to the mortgage I signed on for for the next 10-15 years like most of the comments say I should? Or, should I just let the house go? Bank (GMAC) won't consider a short sale until I make late payments. I'm currently making $48,000/year, the house in FL is not rented, I pay $600/month child support, I'm living with my step parents 2.5 years now. I currently qualify for $100,000 loan despite financial difficulties. Should I purchase a home now and let the house in FL go delinquent? Should I rent and allow house to go delinquent? Should I keep living at my step parents house for next 10 - 20 years until my FL house is no longer underwater? My credit score is 820 so I've proven to be financially responsible. What good does this credit worthiness do now that I've moved, cannot sell, cannot afford to leave step parents house, cannot afford to do anything, totally immobile

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  17

  Underwater 31

  09/08/09 | Report as spam

  RE: $15,000 Home Buyer Tax Credit Gets Another Boost

  It seems there should be some relief for those who lost their job, relocated for another position, house is now rented b/c it is too far underwater to sell and is no longer primary residence so no mortgage relief. If this is the situation and house is 60% underwater what choices does one have? No second mortgages, prime loan, 820 credit score, no late payments, yet..., etc...
  
  

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  18

  Hamilton36

  09/15/09 | Report as spam

  RE: $15,000 Home Buyer Tax Credit Gets Another Boost

  A 15k tax credit would by a tremendous relief for me and 1000's like me. I bought a house in 2005 and each it becomes more dissicult to make mortgage payments in addition each passing month our savings gets smaller. People who quaify for 2009 $8k tax credit were not affected by the econonomy, they could afford to buy a house. People who bought earlier recieved "help" from scams and uncoopertive banks. Thankyou Bob in AZ

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  19

  Ilyce Glink

  09/16/09 | Report as spam

  RE: $15,000 Home Buyer Tax Credit Gets Another Boost

  Underwater 31 -
  
  You are in an extremely tough position - and I know from my mail that there are thousands of other people who are walking many miles in your same shoes.
  
  I know the impulse is to abandon the Florida house. But at a meeting I was at on Monday at the Federal Reserve Bank in Chicago, it seems that there are some new rules/incentives coming (about to be announced) from the government to make short sales easier to complete. Right now, they're a nightmare.
  
  I'm not sure why your lender won't agree to a short sale. They'll get far more from your short sale than they will from a foreclosure - which might only net them 10 cents on the dollar. It does seem as if they are looking to completely trash your credit - to get even, if nothing else. I can't believe that's the case. Did you bring them a short sale and they turned you down?
  
  I can't advise you to walk away - but if your lender forces your hand and refuses to help, then you have to do what you have to do. Buying another house now seems like a strange idea when you have so many other obligations. But if you're planning to make your home in Ohio, and start another life, then consider it.
  
  But, it's a huge risk.
  
  Let me know what happens. And, you might try escalating your concerns to the OCC (Office of the Comptroller of the Currency). They regulate national banks and probably wouldn't like hearing that one of their lenders is being so uncooperative.

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  20

  Ilyce Glink

  09/16/09 | Report as spam

  RE: $15,000 Home Buyer Tax Credit Gets Another Boost

  Hamilton 36 - if you own a house now, are you saying that you'd sell it and buy another to get the $15,000 tax credit? I wonder how that would work for you, unless you have a house that would readily sell.
  
  I'm concerned that a $15,000 tax credit, even more than the $8,000 tax credit, is simply pushing sales forward. What will this mean for next year's sales, or house sales in 2011?
  
  Thanks for your comments.

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  21

  Hamilton36

  09/17/09 | Report as spam

  RE: $15,000 Home Buyer Tax Credit Gets Another Boost

  Ilyce Glink: I read that 15K tax credit would be for all home owners reguardless of when they bought their home. Perhaps I read wrong. I also thought that it would be a massive expenditure, but isn't that what government is all about these days.

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  22

  Ilyce Glink

  09/18/09 | Report as spam

  RE: $15,000 Home Buyer Tax Credit Gets Another Boost

  @Hamilton36:
  
  Yes. Sen. Johnny Isakson's $15,000 tax credit is an expansion of the current $8,000 tax credit in that it is available to all home buyers. I'm not sure if it would also be available to real estate investors.
  
  Here's a link to the story that explains Sen. Isakson's $15,000 tax credit proposal.
  
  And, yes, it would be expensive for the government. The real question is this: What kind of a real estate market do we have if three banks make the majority of the loans, the government backs 85 percent of the loans, and then buys 80 percent of the underlying paper?
  
  Thanks for your comment.

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  23

  Underwater 31

  09/26/09 | Report as spam

  RE: $15,000 Home Buyer Tax Credit Gets Another Boost

  Ilyce,
  
  My lender went so far as to complete a BPO and it came to $55,000. The lender has said they will not consider a short sale offer until I miss at least three payments. I tried for a loan modifiction, but since I claimed the home as a rental on my 2008 tax return I was denied. My understanding is that if I miss mortgage payments in order to expedite a short sale I then will not be able to purchase a home for at least three years and my credit will take a huge hit. Also, the lender would not have to accept a short sale offer and could come after me for the balance of the loan($57,000). I plan to stay in Ohio permanently and would like a house of my own. I will file a complaint with the OCC as you recommend. It seems unreasonable to put 10% down, make payments, end up 60% underwater, and then still have to miss payments to warrant a short sale. I just rented unit for $750/month but have to pay RE of 15% annual.