President Obama is expected to sign the revised home buyer credit some time tomorrow. And, at the risk of looking a gift horse in the mouth, I'm not sure how I really feel about the whole thing.
With the increased income caps of $125,000 ($225,000 for married couples), more people in the DC area will be able to take advantage of it. But think about it a minute. Is the idea to help first time buyers? Or is it to help sellers? And who are the sellers? A lot of them are banks selling foreclosed properties.
Um. Is this one more bank subsidy?
The subsidy is providing an incentive for buyers to go into the market. With more buyers in the market, home prices are increasing in some areas, and here in Washington, we are starting to see multiple offers in the double digits for well-priced homes. So the buyer's tax credit may be offset by higher home prices, at least at the lower end of the price spectrum.
I have to keep in mind that the lower end of our price range in Upper Northwest DC is upper brackets in other parts of the area. Many neighborhoods east of Rock Creek Park and in other quadrants will benefit. And the credit will likely benefit condo sellers.
While this isn't a bad thing for sellers and the buyers who will get the tax credit, remember that a tax credit is $8,000 per transaction being subtracted from the plus side of the
national budget, which is already bursting at the seams.
In the meantime, I will try to do my part to make hay while the credit is in effect. Hopefully, the credit will benefit Realtors® around the country, and we will pay more in income taxes, unless of course, we make less than the income cap and buy a place.
I was hopeful they continued the credit far a bit longer to hep get through some of the Foreclosureson the market. We will see how much it adds to the budget.
Patricia,
Thank you. I am getting surprised by numerous happy blogs about another waste of taxpayers money. And while we were so angry with the government for wasting money on banks or auto industry, we somehow are very happy with the waste in our own backyard. Completely forgetting that government does not make money, but wastes our money.
I do not think we sould be that happy. Yours is a voice of reason. We stopped looking at things the minute we can get some personal benefit.
Not good for us
It's sad that the credit did exactly that...raised home prices! I've seen it all over Miami. All the bank owned homes are going for 15- 30% over asking price because of all the buyers desperate to get in on a "good thing."
Hi Pat, we have not seen the multiple offer situation so much like other places. Foreclosed homes are hitting now a bit more than before.
I am not sure how I feel about it, but like you, I will make hay while the sun shines.
No doubt. The credit is a mixed blessing. On the one hand it does help stimulate the housing market, on the other it creates even more deficit and as Maggie mentioned, slightly higher prices. I'm often surprised at my libertarian "get rid of Government interference in my life" Realtor buddies who love this because it may make them a few more bucks.
What I'm wondering is if it will really help the winter housing market since the winter time is normally pretty slow anyway. My guess is that we'll have a robust Spring market beginning a little earlier (in February). I wouldn't run out to Neimann Marcus with your Christmas list just yet. It may still be a Target kind of year.
Pros and cons to be sure. Home prices here have not risen much and I have not seen a lot of multiple bids, but I think Ken is right. We will see an earlier spring market than last year.
Thank goodness you wrote this post so I would have one to comment on regarding this extension. I an so Team Pat on this one. In my opinion, all it's doing is putting people in homes that should be in the first place - um, hello? Same problem as before which means same problems down the road. UUgghhhh....
Let's continue to get the word out! Have a terrific weekend, Pat!
Pat: While the tax credit hasn't had a big impact on our area -- we are primarily a second-home market -- I do worry that it is, in effect, creating yet another artificial prop for the overall market. And that's how we got into this mess in the first place! So, like you, I have mixed feelings about the credit.
Wonderful analysis...as always!
Pat: Living in DC has made you jaded. Do you think that the government would honestly not have done this if their good old boys at the banks weren't in the real estate market. (I hope you realize this comment is drenched in sarcasm.)
Pat --- I cannot help but feel that this is not necessarily a good thing --someone is going to have to pay all this money back. But,since it has been done, we may as well "make the most of it" ---
I have had a feeling for a time now that this may not be in the best interest of our economy in addition to others here in the RAIN.
Pat,
Interesting take about the banks. Makes $ense to me. The tax credit hasn't had much impact on my business. Our market is primarily luxury. I think the new income caps will help some 1 st time buyers in Manhattan but they are buying anyway. Diversified buyers are buying not only first time buyers.
Pat,
I think it probably does not pencil out worth a darn but the first one trickled down to me pretty nicely so I willl not complain.