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Gerry Clinchy
10-29-2009, 01:37 PM
It makes more sense to end the program in the spring market when the natural market tendency is "up". Thus pulling out the "prop" may not have as dramatic effect as pulling it out at the end of Nov. Ending the program Nov. 30 would have been a double whammy, since the market naturally dips then. This may encourage more activity over the winter months.


RISMEDIA, October 29, 2009—(MCT/The Wall Street Journal)-The Senate has reached a compromise on extending and expanding the $8,000 tax credit for first-time home buyers, a boost the housing industry believes will help it pull out of its two-year-old downturn.

While its passage remains uncertain, the agreement would extend the existing credit for first-time homebuyers, worth up to $8,000, while offering a new credit of up to $6,500 for some existing homeowners, Senate aides said. The reduced credit would be available to all homebuyers who have been in their current residence for a consecutive five-year period in the past eight years. Lawmakers in Washington also raised the qualifying income limits to $125,000 for single taxpayers and $250,000 for joint taxpayers, from the current $75,000 and $150,000, housing-industry sources said. Under the Senate compromise, buyers must have sales agreements in hand by April 30, but they will have until June 30 to go to settlement, said the sources. The measure still faces votes in the full Senate and the House.

Treasury Secretary Tim Geithner and HUD Secretary Shaun Donovan are in full support of the Senate’s proposal to both extend and expand the first-time homebuyer tax credit and called on Congress to approve key housing measures that include the tax credit. "We welcome efforts taken by Congress to extend the First-Time Homebuyer Tax Credit for a limited period. This credit has brought new families into the housing market and contributed to three consecutive months of rising home prices nationwide," said Secretaries Geithner and Donovan. "In extending the credit, we urge Congress to include strict measures to combat tax fraud and protect responsible homeowners.”

The current tax credit did little for the new-home market in September, the Commerce Department recently reported—news that took many industry analysts by surprise. Sales fell 3.6% from August and 7.8% from September 2008. Industry observers had expected a fifth consecutive monthly increase in new-home sales, believing that the tax incentive for qualified first-time buyers—credited with 357,000 sales of previously owned homes so far this year—would do the trick. Instead, sales of typically more expensive newly built houses slipped. "The decline in new-home sales seems to us to be more a function of the attractive pricing available on resales in the current environment than a reflection of weakening demand," said Michael Feder, president of Radar Logic in New York, which tracks the market.

"Since hitting rock bottom in March, demand is up 20 percent," said Joel L. Naroff of Naroff Economic Advisers in Holland, Pa. For Naroff, the robust rise in existing-home purchases—9.2% year over year in September—indicated that the housing market was not faltering. "Maybe the issue is supply, which fell to its lowest level in 27 years," he said. "Builders, at least those left standing, have been making sure they don't have any houses sitting around, and they have been very successful in controlling inventories."

IHS Global Insight economist Patrick Newport echoed that, noting new-home inventories "sank for the 29th straight month to their lowest level since November 1982." Naroff maintained housing has recovered enough to stand without the tax credit, but Newport said that if the credit were not extended and expanded, housing demand would take a hit, and home sales would drop.

The new provisions are aimed at broadening availability of the credit beyond first-time buyers and giving the weakened real estate market a bigger boost while preventing real estate investors from benefitting. While Senate lawmakers appear to have reached a deal on the substance of the tax credit, they are still at odds over how it would be brought to the Senate floor.

(c) 2009, The Philadelphia Inquirer.
Distributed by McClatchy-Tribune Information Services.

Goose
10-29-2009, 09:51 PM
The NAR estimates approximately 2 million first-time homebuyers will take advantage of the $8,000 tax credit, with about 350,000 additional sales that would not have taken place without the credit.

So this tax credit cost taxpayers about $45,000 per each additional home sold.

Another government boondoggle.

Gerry Clinchy
10-29-2009, 11:39 PM
I don't disagree, Goose. It might have been better to let the market find its own "bottom". At this point we don't know where the bottom might be, or might have been.

Personally, in my own area, I think there are still prices that are artificially high. OTOH, we see more price reductions. Sellers not willing to accept the lower value of their property eventually reduce the price. But it can mean over 90 days before the property gets to the right market price.

The market is flooded with short sales and foreclosures. The short sales can take 3 to 6 months to close! depending on the lender. That kind of time frame can be difficult for a buyer. If there is a radical jump in interest rates, for example, it could push the buyer outside their qualification level.

I can never recall getting so many calls at our office for rentals! These are not people who have lost their homes, so I'm not quite sure why so many are calling real estate offices. Most renters usually find their homes through the newspaper.

Goose
10-30-2009, 08:44 AM
Politicians never look at the big picture. They're only interested in reelection and power.

U.S. national debt is almost $12 trillion which works out to $110,000 per taxpayer.

Add to this another $100 trillion or so in unfunded liabilities (social security, medicare, etc) which works out to $344,000 per citizen.

Interest (that we pay) on the debt is growing and growing and growing.

This simply isn't sustainable and programs like tax credits for new homeowners and cash for clunkers are nothing more than generational theft. We're stealing wealth from our children, grandchildren and great-grandchildren...plain and simple.

Personally, I think it's too late to do anything about it because we don't have the courage to stop the spending. We'll eventually default on this mountain of debt and all hell will break loose.

Prepare thyself:)

We live in Cuba now.

code3retrievers
10-30-2009, 02:52 PM
Politicians never look at the big picture. They're only interested in reelection and power.

U.S. national debt is almost $12 trillion which works out to $110,000 per taxpayer.

Add to this another $100 trillion or so in unfunded liabilities (social security, medicare, etc) which works out to $344,000 per citizen.

Interest (that we pay) on the debt is growing and growing and growing.

This simply isn't sustainable and programs like tax credits for new homeowners and cash for clunkers are nothing more than generational theft. We're stealing wealth from our children, grandchildren and great-grandchildren...plain and simple.

Personally, I think it's too late to do anything about it because we don't have the courage to stop the spending. We'll eventually default on this mountain of debt and all hell will break loose.

Prepare thyself:)

We live in Cuba now.

Goose,

The left does not want to look at those numbers. They act as if these debts will some how just magically disappear.

I don't care who made the mess, I want to know who is going to fix it. So far Obama is making it worse and has no plan to make it better. He is on course to make us a third world economy.

"You can't fix stupid"

Gerry Clinchy
11-06-2009, 12:20 AM
The extension & expansion has passed ...


After the Senate gave final approval last night without a dissenting vote, the House of Representatives voted overwhelmingly this afternoon to pass legislation containing an extension and expansion of the homebuyer tax credit, completing Congressional action and sending the tax credit to President Obama for his signature, possibly as early as tomorrow.

The $8,000 homebuyer tax credit for first-time buyers, due to expire in 25 days, will be extended through April 30 of next year and buyers will have an additional two months, until the end of June, to close. First-time buyers who are in the process of making a purchase will no longer need to worry about qualifying for the $8,000 credit if they close after the November 30 deadline. The new legislation increases the income limit for couples with income up to $225,000, a nearly $55,000 increase above the level in existing law.

For the first time, the new legislation makes buyers who already own a home eligible for a credit. A $6,500 maximum credit will be available to existing homeowners who have lived in their current residence for five of the prior eight years. The legislation limits eligibility for the existing homeowner credit to homes worth $800,000 or less.

The legislation takes effect December 1 and is not retroactive. Both credits are available only for primary residences, not second homes or investment properties.

In the House debate, Speaker Nancy Pelosi (D-Calif.) took the floor to say the homebuyer tax credit was helping a new generation of Americans live out their dream of homeownership and financial independence. Debate on the homebuyer credit was overwhelmingly positive and the legislation passed 403 to 12.

However, several leading economists have voiced concern about the $16.7 billion cost of the credit and the wisdom of spending up to $400,000 per homebuyer to stimulate real estate sales and White House support for extending the credit has been lukewarm at best. However, it is virtually certain that the President will sign the legislative package, which contains an expansion of unemployment benefits as well as the tax changes.

In the Senate, the homebuyer tax credit was amended to a bill expanding unemployment benefits by 20 weeks for those who have exhausted their benefit. The latest unemployment numbers are due out tomorrow and Congressional leaders are rushing the unemployment bill to the White House so that the President can show compassion by signing on the same day more job losses are announced.

The legislation included provisions added to address complaints of fraud. The Internal Revenue Service is given greater authority to oversee the process to root out fraud, and provisions are added in response to past abuses of false sales or underage buyers. An investigation by the Treasury Department’s Inspector General for Tax Administration found that more than 580 children, some as young as four years old, had received $627,000 in first-time homebuyer credits. The IRS has identified 167 suspected criminal schemes and opened nearly 107,000 examinations of potential civil violations of the first-time homebuyer tax credit.

The legislation also contains a provision supported by the National Association of Home Builders which will help larger companies strapped for cash with net operating losses (NOL). Ordinarily these companies can carry back these losses for only two years to qualify for a tax refund. The provision would make this process extend the carry-back to five years for either 2008 or 2009. The tax break will now apply to losses in either 2008 or 2009, and the income cap will come off.


Not sure where they came up with the figure of a cost of $400,000 per homebuyer. If this is true, in some cases it would have just been a whole lot cheaper to give the house to the buyers! (Maybe it was a typo and should have been $40,000?)

107,000 fraud investigations based on 347,000 of sales? (see first quote that started the thread) ... that's nearly 1/3 of all these sales!

Wonder why the largest homebuilders need the help on present losses ... they made large profits during the boom. It was typical for all the builders to raise prices on a regular basis during the boom to "what the market would bear". This translated into very large profits on each home as the prices were on the upswing (while the cost of building had been fixed months before at then-market prices). I'm not against making profit, but part of free enterprise is also the risk of losses. These companies seem to operate on the same basis as our govt: make $ while you can & then have someone else bail you out when you don't plan wisely. What about the smaller builders? They just have to take their lumps without govt help?

Goose
11-06-2009, 07:45 AM
Hell, let's just make these programs permanent.

What we're doing is nothing less than generational rape. We're stealing money from our kids and destroying any future they hope to have.

NAMBLA would be proud of what the democrats are doing to our children.

Gerry Clinchy
11-21-2009, 08:34 AM
Housing prices continue to decrease ...
http://rismedia.com/2009-11-21/more-than-1-in-4-homes-for-sale-in-price-reduction-report-have-seen-reduction/



RISMEDIA, November 21, 2009—Trulia, Inc. has announced that 25.6% of homes currently on the market in the United States as of November 1, 2009 have experienced at least one price cut during the past 12 months. More than 40% of the top 50 major metros across the U.S. are experiencing price reduction levels above 30%, significantly higher than the national average. The average discount for price-reduced homes continues to hold steady at 10% off of



The largest price decreases are still in the luxury home market (homes $2 million or more).

Even in the short sale and foreclosure markets the prices are still tending to be on the high side of what the market pressures might dictate. The banks, it seems, are just as vulnerable as other sellers in not being able to bring themselves to acknowledge market pressures.

With the extension of the tax credit, we may not see the extent of unfettered market forces until the tax credits end April 30.

Gerry Clinchy
11-29-2009, 11:13 AM
NY Times
http://www.nytimes.com/2009/11/29/business/economy/29modify.html?th&emc=th

Seems that the bureaucrats did not do a real good job at writing the details for how the banks were supposed to give relief to all those in the danger of foreclosure.

Wonder if the bureaucracy will do a better job of translating legislation on health care reform into workable, productive procedures? Any bets?

This program deals with 650,000 mortgages. Hmm ... v. 35 million health care insurance policies. It ought to take them about ten years to figure out what they have done wrong.