2009.11.06
Editorial: Overstimulating homebuyers
Stimulating to excess
At great expense, Congress sweetens the deal for homebuyers.
If a family can afford an $800,000 home, could the lack of a $6,500 tax credit really be a deal breaker? Congress must think so as it prepares to spend $10 billion by April to entice not just first-time homebuyers to purchase a house but also existing homeowners to trade up. Granted, the real estate market is still sluggish and could use a little more stimulating. But is it wise for the government to encourage Americans to buy more expensive homes? Isn't that part of what got the nation into this fix?
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Well dang, they are giving away a bunch of free money and once again, we're in no position to capitalize. We bought our house, which we could easily afford, just as the market was in it's massive downturn, but about 7 months before the first homebuyer's tax credit took effect. We could have used a new car, but my old 'clunker' was too good on gas to qualify, not that we could have afforded a loan for a new car anyway, I always buy used. We actually pay all of our debts on-time, and have not missed a payment or welched on paying, so we don't qualify for any of the bailouts or reorganization programs to wipe clean or restructure deadbeat's debts. And now, they throw more money out for buying houses. No wonder so many people just up and quit taking personal responsibility, with all the cash flying around, you can afford to.
Comment by Other John — November 6, 2009 @ 8:28 am
Please remember that while this is a great incentive to buy or move up, the desire to do so remains limited by the lack of mortgage availibility. This incentive will go only to those that can afford to make the payments, have excellent credit, and have jobs. Mortgage companies simply are not lending except to a few. I spoke with a person yesterday in Alexandria concerning Washington Attorney trying to buy an expensiv ehome. He met the income requirements, was putting over a third down in cash, had no other debt obligations, and the bank decided that the appraiser was wrong and that the attorney was paying too much for the home. They turned him down. A recent news report says that FHA has decided to tighten loan requirement further as to many loans have gone bad. These incentive to stimulate the market have to go to those that meet the mortgage companies' requirements to stimulate the market. That is why they have included higher priced homes and expanded the range.
Comment by Richard — November 6, 2009 @ 10:24 am
What a joke! Why are we as a country punishing those of us who have done things the right way? I've struggled, but made it through by making cuts in my personal budget and such...
Comment by Danny — November 6, 2009 @ 11:18 am
Almost makes me want to quit paying on everything I owe, file bankruptcy and have it all re-worked to lower payments or partially reduced, and just take the money I save for the next few months and buy a 52" plasma, PS3, and a Quad like all the other responsible Americans out there.
Comment by Other John — November 6, 2009 @ 11:38 am
Here is another government program that costs us money but isn't giving us a good return on investment. People will purchase a home based on affordability which is determined by price, income, rate, and term, not so much by tax credit. You'd have to really be on the fence for this to work. I will say that this incentive does influence the timing of purchases such as getting the loan before the incentive goes away, but it shouldn't make or break the decision to purchase.
Raising the limit to $800K is not an issue as housing costs vary dramatically by region. Average prices in the Northeast or West Coast can easily exceed the previous $330K or so earlier limit.
Regarding the cash for clunkers, the data show that most people traded in their gas-guzzling trucks for .... gas-guzzling new trucks. It was designed for a quick boost to GDP, not environmental goals. Only a Democrat would try and put an erroneous social qualification on a stimulus program.
Comment by Jim — November 6, 2009 @ 12:21 pm
Correct again OJ! I'd have all kinds of nice stuff if I could just avoid those pesky reponsibilities and let the government do it for me!
Comment by Danny — November 6, 2009 @ 12:39 pm
You guys just do not get it. You are so hung up on poor people getting benefits that you do not understand what is going on. As I stated earlier, it is not designed for poor people. They do not qualify for mortgages. In order to stimulate the real estate market which is where the bulk of the slump started, you have to have buyers that can actually buy. Congress is trying to get people who can afford and qualify for a mortgage to actually buy a house. This means a higher bracket of house and a higher income level.
Some of you are complaining just to complain about something done that will help you. If getting $6,500 back does not interest you and get you thinking about a new home, then why are you griping about a $300 potential $300 tax increase all the time?
Comment by Richard — November 6, 2009 @ 1:31 pm
The point is not to reward anybody. The problem is that the collapse of the mortgage market (a huge market) has been a large drain on the economy. Part of getting the economy moving again is encouraging mortgage lending. The collapse of the financial market was a gigantic punch in the face to the economy and hopefully it will be back on track soon
Comment by Ian — November 6, 2009 @ 6:13 pm