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There’s always something to howl about

More thrilling real estate math from the National Association of Realtors: How much did first-time home-buyers benefit from their $8,000 tax-funded subsidy? Can you count to negative $15,000?

You read that right. On average, recipients of the $8,000 federal housing subsidy lost $15,000 on the homes they purchased using the subsidy as their incentive.

From SmartMoney.com:

The government’s recent $8,000 cash incentive for first-time home buyers has proved even more costly for recipients than for taxpayers, according to data released Monday. Typical buyers have lost twice as much to price declines as they received from the program.

The median home value fell to about $170,000 in March from $185,000 a year earlier, according to Zillow.com. That means a buyer who closed on a house just before the tax-credit program expired in April 2010 collected $8,000 but has since lost $15,000 in value. Those who bought earlier in the program have done worse; the median price is down $20,000 from March 2009.

This was all completely foreseeable, of course. The only person, seemingly, who cannot grasp simple economics is Barrack Obama, temporarily president of the United States. But don’t get the idea that Obama is done wrecking the housing market just yet. Even now, his minions are pushing for still more sub-prime mortgages to economically-unqualified home-buyers.

As the great Tom Waits said, “I don’t have a drinking problem — except when I can’t get a drink.” America doesn’t have a housing problem. The problem is that, despite the state’s (mis)education monopoly, there are still too many people who can suss out a hustle, if you give them enough time.

Related posts:
  • First time home-buyers tax credit, the morning after: “The government’s ‘gift’ to new home-buyers? A house immediately worth $8,000 less than they paid for it.”
  • If the National Association of Realtors were to back the repeal of the mortgage interest tax deduction, it could do three very patriotic things: It could reduce the debt load on all Americans, help consumers make wiser use of their money — and get itself off the dole!
  • “The net effect of government intrusions in the real estate market is to create a standing wave of foreclosures amid steadily-declining home values”

  • 5 comments

    5 Comments so far

    1. Ben Fisher May 11th, 2011 3:40 pm

      Weird. Who would have seen that coming?!

    2. Mark Madsen May 11th, 2011 4:40 pm

      >>Even now, his minions are pushing for still more sub-prime mortgages to economically-unqualified home-buyers.

      Sweet, I should get my old sub-prime shop back together and start dropping refi or purchase letters in targeted neighborhoods around town.

    3. Sean Purcell May 12th, 2011 4:04 pm

      When a man’s political beliefs are more akin to religion than logic, it’s not that difficult for him to point at the obvious and say: “I don’t see that!”

    4. [...] legislation like the Community Reinvestment Act, the Government Sponsored Entities laws, the first-time home-buyer tax credit, [...]

    5. Joe Hayden June 1st, 2011 8:13 pm

      One important aspect of this is that you have not lost any value in your home unless you sell and sell at a loss. Of course, it is feasible to assume that a percentage of persons who were afforded into the market by the tax credit may not be able to maintain their mortgage and therefore have to sell or default at a loss. When they do, they will likely contribute to locally declining prices and a stagnation of the market through increased inventory.

      The free market would be so much better off without government (especially this government’s) intervention – hence “free market”, but we don’t stand for that too often these days in America. We want instant gratification and credit, and the consequences are someone else’s problem.