Tax credit doesn't hike home prices
Letter to the Editor
By Inman News, Tuesday, August 18, 2009.Re: 'First-time-buyer tax credit is "unfair" ' (Aug. 17)
Dear Editor:
I don't know where Marcie comes from or if she has ever sold real estate, but the first-time homebuyer tax credit HAS NOT impacted the sale price on any properties I have seen. And in my area (an upscale community) it has NO impact whatsoever.
Another issue has been finding first-time homebuyers with the money to put down or that are creditworthy. I think, in the Central Ohio area, this (credit) has had only a small impact on the home sales, therefore not creating but a ripple of economic impact on our area.
Carol Toronto
Realtor
Powell, Ohio
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Submitted by Greg Salera on August 18, 2009 - 6:30pm.
I agree with Marcie. It's this type of manipulation that causes artificial escallation in the housing market, eventually leading to housing bubbles. Even if this 1st time buyer credit isn't broad enough to have a large impact on the entire market it's still using bad logic. True market forces should drive sales and they shouldn't be manipulated.
Greg Salera
Partners Real Estate
9300-A Old Keene Mill Rd
Burke, VA 22015
www.virginiarealtyservices.com
Submitted by Marcie Geffner on August 18, 2009 - 7:06pm.
A little math on the tax credit suggests an $8.8 Billion infusion into the housing market. It doesn't take a Realtor or economist to figure out that that has to have some inflationary affect on prices.
The fact that prices have declined in many areas doesn't necessarily mean that the tax credit hasn't been a prop to make those prices higher than they otherwise would have been without it.
Marcie Geffner, www.marciegeffner.blogspot.com
Submitted by Paul Howard on August 19, 2009 - 3:44am.
Lets hope that it is a prop that lasts long enough and has enough strength to help revive the economy. EVERYTHING an economic entity (including the government) does (or doesn't do) affects the economy. When both consumer confidence and aggregate purchasing power are so eroded that they stop buying, the economy takes a nosedive. OK, so that is Adam Smith's invisible hand at work. Some of us think that when the invisible hand causes human suffering it is time to step up and guide it till it can work on it's own within healthy parameters.
Pure economic theory is great in a world meeting it's assumptions of perfect information, instantaneous adjustments and homogeneous products. That is not, though, the world we live in.
I guess I'm just more a people person.
Paul Howard, Broker
www.NJHomeBuyer.com Realty
Cherry Hill NJ 08002
Submitted by Albert Clark on August 19, 2009 - 4:03am.
HI, over the last 14 months there have been four foreclosed homes within a block of mine ( Scranton PA) All have been sold in the last month, grass cut....etc.... to renters. Two that I talked to so far said the credit put them "over the top". I have to believe a high tide floats all ships and that the reduction in inventory is good for all. Also those houses stopped loosing value.. I would think that has positive impact on my value.. and my neighbors, and their neighbors. If more renters buy as first timers... the house that the "Mover Up" needs to sell ... may sell.. and the house the next mover up needs to sell... you get the idea!
Albert Clark
Home Actions Relationship Platform
Scranton, PA
570 510 3507
aclark@homeactions.net
Submitted by Rob Aubrey on August 19, 2009 - 4:13am.
It all boils down to jobs. The tax credit certainly had a big impact in my market place. We have stable employment and in fact we have big companies opening up here.
Combine the job market along with our demographics, has raised prices, not necessarily but our entry level homes are getting multiple bids.
In order for the market(s) to correct themselves the entry level has to fill up first.
rob aubrey
www.MoreUtahListings.com
Submitted by Paul Gage on August 19, 2009 - 9:17am.
Considering that even in a very slow year home sales total well over 1 trillion dollars, it would seem to me that an injection of a mere $8.8 billion would have very little inflationary effect on prices, as it is less than 1% of the pot.
Paul Gage
Senior Product & Marketing Manager
Z57 Internet Solutions
www.z57.com
Submitted by Jon Astaris on August 19, 2009 - 9:31am.
Ms Geffner is spot on this time. Impact on the "first time buyers" will be negative and dramatic a few years down the pike when they realize their homes went down in value and they reacted emotionally and foolishly to the enticements of a desperate (or crooked, take your pick) government. They'll bail in droves.
The price correction has quite a bit to go from here and this new wave of homeowners will feel it.
Second, there are very few or no trickle up effects, no move up buyers because the sellers are mostly banks, and they don't "buy up".
Third, the $8000.00 or so gift is as dishonest as any other redistributive scheme. The truly needy will take it in the teeth; they can't afford to buy, so the portion of taxes that would have gone to get them out of the hole went to the relatively fat first time buyer...same with the clunkers. The related service industries sales people, escrow agents, etc., are happy for a bit longer.
And yes, the free money definitely has an impact on values, as it will be clear once the program ends come December; the drop in sales and prices will be so sudden the recovery crowd will have to go back to the "we inherited this" explanation, or come up with a new scheme.
My guess is sometime in March 2010 if not sooner they'll extend the program indefinitely, even expand it.
Ms Geffner is right again in saying that the banksters and the real estate industry are the real beneficiaries here; without the dupes, er, first time buyers, most of the "starter" homes would be sitting in the banks' portfolio, where they will go anyway a few years down the line.
This and the loan modification "plans" are band aids on a gashing wound.
The real tsunami is in the fog ahead of us.
Submitted by Albert Clark on August 20, 2009 - 2:46am.
Ok.. I am calling my Congressman today and the, Head of Legislative Affairs for NAR, Home Builders, Mortgage Bankers,- Let' see if we can kill the interest deduction while we are at it.. the taxpayer looses there too. RIGHT?.. Write off for local taxes???... Why should we Taxpayers cover that.. Deductions for health insurance for Self employed?.. He wait that's hitting HOME now.....
Shall I go on
Albert Clark
Home Actions Relationship Platform
Scranton, PA
570 510 3507
aclark@homeactions.net
Submitted by Paul Gage on August 21, 2009 - 9:12am.
Bravo Al - let's start a grass roots campaign...
Paul Gage
Senior Product & Marketing Manager
Z57 Internet Solutions
www.z57.com
Submitted by Marcie Geffner on August 21, 2009 - 4:23pm.
It would be very interesting to see a map of where the home buyer tax credit gets used when all's said and done with it. Because in some places, it indeed might not be enough of an effect compared with the total volume of home sales (per Paul's comment) whereas in other places there could be a lot of buyers left in an untenable situation (per Jon's comment).
Marcie Geffner, www.marciegeffner.blogspot.com
Submitted by Paul Gage on August 24, 2009 - 7:29am.
Excellent point Marcie. Living in SoCal sometimes I forget that not all median priced homes in the nation cost a half mill and that, for instance in the midwest where I grew up, $8k goes pretty far for a house.
Paul Gage
Senior Product & Marketing Manager
Z57 Internet Solutions
www.z57.com
Submitted by Moshe Cohen on August 30, 2009 - 6:22pm.
http://www.valuationsolutions.net
Printing money appears to be the solution. Discounted Toyotas, Home subsidies, Free health care, What a great idea?