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Estimate to extend the Home Buyer Tax credit? 16.7 Billion What a Bargain!

I was passed along an article today from the WSJ discussing the cost to extend the $8,000 tax credit and to open it to all people purchasing a home would cost $16.7 Billion according to congressional analysts.

The article goes on to state that this is less than expected and could help generate momentum to continue the credit and extend it until June 30th 2010. Wow! That’s only $78,773,585 dollar a day (give or take a million) for the 212 days the extension would be in place.  Additionally this would extend the offer to anyone who wants to buy a home even if it is not their first home. Income limits would be raised to $150,000 for an individual and $300,000 for couples. The senators who are behind this are hoping to attach this to a bill for extending unemployment benefits.

I’m confused here. How on earth can we have a bill in place to extend both unemployment benefits AND a tax credit for anyone to buy a home?

I will admit that I was excited when Washington State was trying to work out a plan to loan the $8,000 tax credit to be used as a down payment. I rushed out and registered a domain name and had visions of more business than I could possibly handle. What happened though really has changed the way I look at the tax credit. First Washington State was not able to find a way to lend the money for use as a down payment.  Second the people that found my site on the tax credit advance were not qualified to buy with or without a tax credit. AND they were upset that it was only $8,000 and had to be repaid. Not a single person I spoke with was in a position to buy a house. Every person was looking for a hand out not a hand up.

Since this awakening I have been slowly building more and more momentum to suggest to my fellow Realtors that the $8,000 tax credit should be allowed to end at midnight November 30th 2009. Any extension is so expensive that I cannot imagine how we will ever repay the debt that we will take on to bribe more people who should not be buying to buy a home. At first I felt like the red headed step child that lived under the stairs but now common sense must be listened to. We cannot keep bribing people into making a decision to take on a commitment that they are not ready to keep.  Even if it’s only $16,700,000,000

Related posts:
  • Please do NOT extend the $8,000 tax credit
  • Congress extends and expands the home-buyer’s tax credit
  • How Wall Street’s Meltdown Helps Main Street’s Housing

  • 9 comments

    9 Comments so far

    1. Tom Vanderwell October 15th, 2009 4:23 am

      *stands up and applauds*

      Thanks for telling it like it is.

    2. Don Reedy October 15th, 2009 7:10 am

      “When you can snatch the pebble from my hand, it will be time for you to go.”

      You’re free to go now, my friend. Go do good, and don’t limit yourself just to the written word.

    3. Michael Patton October 15th, 2009 9:58 am

      Free market – no govt intervention or manipulation seems the best way to “right our ship”

      Let’s not forget the impact REBATES have had on the auto industry…

      From an article in NY Times ( http://www.nytimes.com/1990/07/04/business/rebates-are-a-reason-for-vehicle-price-increases-by-big-3.html)

      ”Rebates have muddied the waters and made determining the true price of a car incredibly complex,” said Lance Ealey, an automotive specialist with McKinsey & Company, a consulting firm.

      Customers Seem Hooked

      Chrysler was the first to offer rebates on cars, in the early 70′s. The plan was viewed by analysts and competitors as a shrewd marketing move, and other companies soon followed suit. But by the mid-80′s, analysts say, customers were hooked and the car companies saw their sales fall off sharply whenever rebates ended.

      ”The consumer very quickly learns to look for rebates, and it doesn’t take long to see demand dry up between one rebate period and the next,” said James R. Taylor, a professor of marketing at the University of Michigan Business School.

    4. Mark Madsen October 15th, 2009 10:19 am

      Michael – great point about people becoming addicted to rebates.

      Take a look at the proposed S.1731 – Preserving Homes And Communities Act of 2009 – which has a provision for states to give grant money to unemployed homeowners so that they can continue making mortgage payments.

      http://www.opencongress.org/bill/1/111-s1731/show

      I’m just waiting for a new bill that will give grant money to investors so that they can cover rental payments on their unemployed tenants as well.

    5. Al Lorenz October 15th, 2009 11:43 am

      Thanks Scott! I guess that makes you another rebel Realtor!

    6. matt mathews October 15th, 2009 12:06 pm

      Another convert!! Bless you my son. Welcome to our new-Gimme! Gimme! Gimme! social society. Problem is; These idiots will probably find a way to get something into law. I pray not!!!

    7. [...] Estimate to extend the home buyer tax credit? 16.7 billion what a bargain – What’s a few more [...]

    8. Eric October 19th, 2009 8:32 pm

      This discussion makes me think of the operational efficiency realized with an “every day low price” strategy relative to constantly managing short term sales, promotions, etc.
      I’m pretty sure politicians do this on purpose. They know it is much harder to take something away than to give it out in the first place, so that way they can take some credit for fiscal responsibility (eg. putting end-dates on programs) without the programs actually ending.

    9. James Boyer October 22nd, 2009 4:52 pm

      I have noticed that many of the truly low end would be buyers seem to want something for close to nothing. For example, recently I was talking with a prospective buyer via e-mail, This buyer can spend up to about $180,000 which is basically nothing here. I sent him about 30 different condo’s that meet all of his stated needs and wants including price range, and that was all there really was actually. The response I got was typical, I don’t like this and I don’t like that, and if this is all there is I guess I will not look. What a snobby buyer who should be grateful for what he an afford rather then nitpicking everything.