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Should $8,000 homebuyer tax credit be extended?
October 21st, 2009, 11:11 am · 60 Comments · posted by Jon Lansner
Register Washington bureau chief 
Dena Bunis reports that O.C. Republican Rep. Ken Calvert is leading the charge to get the homebuyer tax break renewed.
Calvert teamed up with Rep. Joe Courtney, D- Conn., and got 163 of their colleagues to sign on to a letter urging House Speaker Nancy Pelosi and GOP leader John Boehner to bring legislation to the floor to extend the first time home buyer tax credit. (Click here to read the letter and see who signed it.)
The $8,000 credit expires on Nov. 30. “Nothing will work in this economy if housing prices continue to fall,’’ said Calvert.
- Read more of Dena’s report HERE!
We wonder what you guys are thinking …
What should become of the $8,000 homebuyer incentive?
Did you see … $8,000 homebuyer tax credit on the ropes?
Real estate trends:
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I live in Calvert’s district and will be calling his office at 949-888-8498 to voice my disapproval.
Extend it and make it BIGGER! Let’s break on thru $650K median in 2012! As for getting to $600K median in 2012, it will not matter whether there is a tax credit or not….there is huge demand and massive amount of cash out there.
I agree (as does most of the voters it seems)… We need to stop over-subsidizing housing and let markets adjust to natural levels. The distortion to the market is just going to lead to future problems and price stagnation.
http://www.beyondthemargin.net/search/label/Economics%20and%20Finance
I live in Calvert’s district and I will be calling his office to ask him to continue! There is too much inventory out there. An $8,000 credit is recouped in property taxes in an average of just 3 years.
I’m sorry, but where are you seeing “too much” inventory?
Terrible idea. Nobody was around with a handout when the vast majority of us bought our first home.
Why should my tax dollars go toward buying somebody else a house?
And what is wrong with allowing housing prices to fall? A good segment of potential home buyers are priced out of homeownership by artificially high prices. The real estate market, if left alone, is self-correcting–no subsidies needed.
Compare prices in Southern California to almost anywhere else in the country. You will see that for the cost of a three-bedroom post-war cracker box, you could live, relatively speaking, like royalty.
Your not helping somebody buy a house, your supporting the housing market for the benefit of the banks. Like the financial business doesn’t get enough welfare as it is.
Then it is an artifical market.
The artificial market is in the rental sector - NOT the buying sector. Home rental prices have only dropped by an average of $80 per month. How much has realestate dropped in comparison? Corporate welfare is being paid in the form of tax write offs to landlords, who would rather leave a property sit empty and claim a loss than compete by lowering the price of rent.
I purchased my first home in December after renting for years. I acquired a repo that was severly beat up with 20% down - NOT 3% with an assisted loan. I now have a larger and nicer home for less money than I was paying in rent. What did I do with the $7,000 credit? I spent it at Home Depot to remodel. Every dime! The tax credit doesn’t factor into your ability to purchase the home. It arrives far too late to make it part of the purchase equation.
So who got my tax credit money? Local building suppliers, local carpet installers, local tradesmen. That is who benefits from this credit. NOT the banks. NOT greedy landlords! Hard working people benefit from it.
Of course, we could do nothing and just pay these people unemployment or welfare for a few more years, so they can sit on their arses and wait for the “free market” to solve the problem. I’m glad to see Calvert is smart enough to look at some centurist ideals when they make sense.
Looks like the extended tax credit is toast. Get over it.
Unfortunately for NAR… they’ve spent $9 million in 09 to date on lobbying expenditures. I wonder if they’ll file a formal protest :)
I still get this sick feeling in my stomach that some form of this will eventually be passed.
A sick feeling in the stomach is a good description. The fact that there is any support for this is vomit-inducing. It was an awful idea in the first place and would be horrendous to continue. Now we have a mini-bubble that needs to deflate. If we extend the credit and make it bigger, we will create a larger bubble, which more risk of another collapse.
The credit was a stupid idea in the first place. Extending it would be just more stupidity. Leave it up to Dodd and Pelosi to lead the charge of screwing our future further. Who keeps electing these fools?
Let it die. It doesn’t benefit Orange County residents anyway. In order to qualify to purchase the majority of homes in OC your income already exceeds the income restrictions in the credit.
That is what is happening to me. I made 300K last year and I am shut out as a first time buyer. The double whammy is that the market is taking into account the 8K credit and prices are higher as a result. Please die now.
I don’t see how you can make $300,000 annual and are priced out of the OC market. You could buy a house tomorrow unless you have over extended yourself on a bunch of credit card debt and other frivolous purchases.
Just like someone who makes 75k shouldn’t buy a median priced house….. But many people here did.
I have no debt at all. Own both my cars and pay off my credit card every month. I have more than enough cash for a 20% down payment. I am just waiting until the artificial demand is gone.
It benefits plenty of OC buyers.
The payscale limit is $150K, then phases out to $170K. You could find plenty of homes in OC to buy with that kind of income.
Amazing, people still need to be convinced to buy a house with a $8000 debtors credit. Folks….step right up and take on more debt…. giddy up….. hopefully you are not forced to move for job reasons as the deflationary forces rage on…..
If the problem is debt….. how pray tell is it a good thing to give credit for people to take on more auto and housing debt….. what a waste of time, money, and our children’s future….
What diffrence does it make ?
What is the cost and level of fraud in the current program? These are important policy considerations.
The IRS is investigating 100K+ cases. The estimates were that the tax credit generated an extra 350K purchases that otherwise would not have happend which results in a cost of $43K per extra purchase. The fact that people are scamming this is enough for me to shut it down completely but on top of that we are financing the down payments of people who can’t save and are highly likely to default in the future. We are setting ourselves up for another catastrophe in the future and we will pay a very heavy price.
“program cost is about $43,000 per additional buyer”
http://www.calculatedriskblog.com/2009/09/streitfeld-housing-tax-credit-debate.html
fraud: http://www.calculatedriskblog.com/2009/10/wsj-irs-examining-many-suspicious-first.html
And a nice overview on both topics:
http://www.calculatedriskblog.com/2009/10/home-buyer-tax-credit-doa.html
Easy money and government housing regulations/programs are what caused the housing crisis in the first place (which was but a symptom of the greater problem created by Federal Reserve policy). Giving people credits to buy houses on, say, a 3% down FHA program is like treating poison by giving the patient more poison. We don’t need anymore debt in this country. People are in debt, businesses are in debt, the U.S. government is in huge debt (but spending the most on programs designed to get people into more debt while transferring wealth from the poor and middle class to the rich and politically connected), and foreign countries are our creditors who are already telegraphing the preparations to decouple from our currency.
We have to save, save, save. Government has to cut, cut, cut and stop making us uncompetitive. We have to produce like crazy and start selling things to other countries to make up for the consumer mania our economy has been. Let the asset prices fall. Let the bubble industries fail. They are going to fail no matter what. The question is whether or not you want them to drag you down with them by socializing their losses. So far that is what all of these bailouts/stimuluses have been doing. Why would we ever want to make the pain any worse?
It is a fait accompli that is will be renewed….and expanded.
And the likes of you applaud this.
You have no shame.
….and no sense, or you wouldn’t be in the world of hurt you are.
…..but wait a minute, stupid is as stupid does, and there ain’t no cure for stupid.
You like our planned economy, no?
Will the bulls continue to flaunt their RE wealth that is based on government welfare?
But for many, even with govt welfare, they are underwater….
Majority of the American taxpayers are against extending this tax credit but the politicians that WE ELECTED are willing to extend this new home buyer welfare program one has to wonder who these corrupt politicians are really working for…. Obviously not for the people who elected them to office rather for big business and lobbyist that bribe them.
These corrupted politicians are working for their special interest groups….bankers, realtors, brokers, homebuilders, and etc.
These politicians don’t give a damn about the HUGE budget deficits. It’s all about getting their palms greased and living off of taxpayers from their huge retirement pension package.
Just like the majority of us were against bailouts and stimulus packages. They aren’t listening to us because too many of us will just puss out and vote along party lines. Things won’t change until we vote ALL OF THEM out. ALL OF THEM. Even when that means voting in someone from a party you can’t stand.
It’s not just about voting all of them out. It’s about breaking the stranglehold that both parties have had on the political system. A dissatisfied Republican voting Democrat is just maintaining the status quo.
It does seem odd that we are so seriously considering extended it. The majority of the public is against it. Pretty much every economist is against it. The only people for it are those looking to buy a home this year(which they will probably do with or without the credit) and NAR/Banks. What a waste of tax dollars.
I’m looking to buy a home and I’m dead-set against it.
The price I pay for a home will be dependent on two things: 1) how much inventory is out there, and 2) how much other people are willing to pay.
This credit does absolutely nothing to fix the first (which is artificially low since banks are refusing to foreclose on deadbeats who haven’t paid a dime in the last year), and just keeps me on even footing with everyone else for the second. Furthemore, if everyone gets $8,000, and uses it towards a 20% down payment, poof! Everyone can afford $40,000 more! So it’s pushing up prices more than what you actually get.
And let’s not even get started on the insanity of handing money to people who are already doing well enough to buy in the first place. Please, let it die!
Extend it. But only to first time buyers. Not to investors. It has been a vital incentive. Even those masses not purchasing now benefit from an end to the slide in values.
If $8000 was the difference between affording a home and not affording it, then you have absolutely NO business being in that home. You should buy a home that is $8000 cheaper instead of asking government to force taxpayers to give you $8000 to cover the difference.
You sound like all of the other OC republicans that have everything they need are out of touch with the realities for the majority of the population. The typical “I have mine and screw everyone else attitiude”.
We see that niviem has no common sense. 8k vs a purchase price of a house? Are you crazy?
Don’t EVER call me a republican, jerk.
I am a renter, I don’t “have mine” except for a growing savings account because I live beneath my means. I don’t buy things I can’t afford, I don’t buy things that are overpriced, and I don’t expect YOU to give me money so that I can do either of those. There’s nothing political with this idea; it’s common f***ing sense. Got any?
Melvin, do you really think it is so out of touch to just buy a home that costs $8K less? REALLY???? Or is it out of touch to save $8000 over the course of 2-3 years and THEN buy? RREEEEAAAAALLLLLLLYYYYY??????
– Niarb
Extend it AND make it bigger! It should NOT be extended to investors who will not live on the property for 5 years. The credit right now is that a first time buyer must reside on the property for 3 years. I think the time to reside on the property should be increased to 5 years and program should be available to all home buyers expect for investors.
Have you thought through the implications of this tax credit on concepts such as pulling demand forward, free market mechanisms, government bureaucratic inefficiencies? If so, then why did you make this comment?
government interefernce. They started this problem now get out. Stop subsidizing.
Obama is a joke. He is huring our country. I guess he is anti-free speech now–oh I guess not if you agree with him.
Lets get rid of this weasel. Charles Rangel also-a crook-I thought there was going to be change! Obama please resign!!
Obama is not for this. The official White House position is not one of support. 13 of the bill’s 16 supporters are Republicans, including the author (a former RE broker himself).
Oh good. I expect Obama to veto it then, like he did last time. Oh, he didn’t veto it last time?
http://money.cnn.com/2009/02/13/real_estate/homebuyer_tax_credit_finalized/index.htm
^ 1st sentence.
it was a combination of low interest rates created by the Fed and a unregulated/self regulated Wall Street that created the mess. Now we are adding to it with the 8K credit and no skin in the game FHA loans. How quickly we forget the past??
For each dollar that a Senator or Representative votes to give to a bailout, they should have to match a proportional amount from their paycheck, bank accounts, and/or relection campaign fund. You want to vote to set aside 1 billion dollars for a bailout? Ok, Mr. Senator… cough up $500,000.
Currently, there’s absolutely no incentive for these folks to care what they throw our money at. They are treating it like monopoly money!
If we can spend billions and billions of taxpayer dollars on Iraq then we should be able to give Americans tax breaks.
and billions and billions and billions to banks. good idea…
The US government gives the likes of Exxon-Mobil millions and millions in tax breaks and you folks are upset about giving a first time homebuyer an $8K tax credit? Really??? Are you that bitter towards everyone?
If you really can create prosperity by just handing out money, why draw the line at just $8,000 for first time home buyers? How about a $5 million grant for all American citizens over the age of 21? That sure would get the economy rolling, now wouldn’t it?
Of course, the problem is, as Margaret Thatcher noted, sooner or later you run out of other people’s money.
Instead of robbing Peter to incentivize Paul, the real path to prosperity lies in taking as much government out of the equation as possible and letting management, workers and investors keep as much of their earnings as possible.
Note to all unemployed and underemployed: You’ve got your Marxist president. Now you’re going to get your Marxist economics lesson.
Peace and prosperity are the fruits of liberty… not the largess of an ever-expanding, ever-more-repressive government.
Of course, the Dems learned a long time ago that if you rob Peter to pay Paul, you can pretty much count on Paul’s vote. What folks seem to forget is that what the government gives to the people, it must first take from the people. If W-2 Americans had to stroke a check every year for their full tax bill rather than having it withheld from their paychecks, there would be a tax revolt or worse.
Actually, we just borrow it from the Chinese and then print the money when we need to pay them back. Of course, none of you free marketers against big gov are pointing out the fact that our past free market presidents were all for corporate welfare. We give out billions to oil companies, big agriculture and defense contractors but lordy no we should give out a few pennies in comparison to the hard working single mother whose father is in prison for minor drug charges.
The unfortunate reality is that when the gov’t comes looking for job creation, they don’t turn to W-2 wage earners, they go to businesses - this is the reason the tax system favors business owners. If you are going to give $100 to the average American they will do one of two things; either spend it or save it, both of which have limited utility to stimulate an economy. If you give that same $100 to a business owner, they will invest it, which is typically a higher and better use of capital, especially in a downturn. This is why the stimulus (as bad as it was designed) was better than cutting checks to everyone. I’m for a fair and efficient tax system (although it could be much worse here), but incenting people who probably shouldn’t be buying homes in the first place will only postpone the inevitable: housing prices will eventually correct to historical levels and that family will likely default. In the meantime, I continue to rent a studio apartment and do the right things with my money (including paying the taxes to fund these shenanigans), because I’m smart enough not to get in over my head.
Or, you can wait for a “rich relative” to pass on………. NOT. :)
Slump Hits Howard Hughes’s Heirs
Howard Hughes’s heirs hoping for a last, big payday may be disappointed, as the housing bust has decimated the late mogul’s holdings.
http://online.wsj.com/article/SB125616518728700047.html?mod=WSJ_hpp_MIDDLETopStories
They should put the credit program on hold until they arrest and prosecute all those who got the credit fraudulently. Millions went to people who currently own homes or didn’t qualify on income guidelines. First time buyer credit even went to children!
Our fine govt at work… Where’d that TARP go? I dunno.
I am in the market for a home (and have the income and cash), but have sat out the market for 2 years waiting for prices to stabilize. Extending or expanding the housing credit will only inflate the bubble further, likely causing me to wait longer. The market will find it’s equilibrium eventually, but only after the gov’t steps out of the picture. I’ve watched with great interest the bidding wars that happen on sub $500k properties (the target of the current tax credit) and just shake my head. Will we ever learn? You’ll notice that the testimony of the NAHB, NAR and MBA this week was to the Senate BANKING committe. Do you really think they care about us?
I’m reading all this clap-trap about housing and pricing and who is getting rich over whose bones are sun dried etc and I find it hard to believe I’m in Orange County.
Giving an $8K tax break, not a refund, should be the norm for a conservative crowd. What, you guys don’t think Uncle Sam doesn’t take too much now? Remember your first home? It was like pulling teeth to get into a house. That 8K isn’t much and it only comes once. It’s not like the government is frugal is it?
You want to fight government spending excesses? Get rid of the big spenders in DC, on both parties. What about the ‘earmarks’ Obama pledged to end? What about the Bridge to Nowhere?
And to address you tightwad home owners; if you don’t like giving a first timer a break then don’t take one yourselves. When you get your property tax bill tell the Assessor to waive the $7200 homeowner variance because you don’t want a tax break.
Hard to believe this is Orange County anymore.