The $15,000 tax credit for housing is a bad idea

[AngryAmish]

Why did we get in this recession? Real estate was overvalued. Easy credit made people value it more than they do now with tighter credit.

The prices have to go down. All this credit does is increase the value of real estate artifically - the exact thing which put us in this recession.

[Barack_America]

1. How does a tax credit = easy credit?

Credit is still hard to get. This tax credit is just incentive to encourage people to try go through the hassle of trying to get a house.

[NYC_SKP]

2. You are right. But it would be nice to require strict regulation of qualifying loans.

For example, they must be fixed rate, with a decent down payment and traditionally qualified buyers.

For a while, almost anyone could get an interest only, no down payment, unrealistic toxic loan.

[Barack_America]

4. Agreed.

And thanks for wading through that god-awful sentence I constructed there.

Yikes!

;)

[Hassin Bin Sober]

8. That's pretty much the situation now.

Credit requirements have tightened up quite a bit.

Don't fall in to that republican talking point trap that it was all the fault of the government sponsored/encouraged homeowner initiative programs - it wasn't. The Fannie "My Community" loans and the Freddie "Affordable" loans were/are performing at or above normal loss rates. These loans were, for the most part, the type of loans you mentioned. Lenders that played in the CRA sphere suffered much less than the rest of the players.

It was the Lehman Brothers and Bear Sterns of the business that brought us down and, yes, Fannie's late-to-the-game desire to grab some of the "lucrative" sub-prime market

[customerserviceguy]

10. I think the OP was trying to make the point

that there are a variety of things that pushed the real estate bubble up, and easy credit was one of them. So are the existing tax breaks, like deductability of mortgage interest and taxes, and the fact that you can make a tax-free profit from a principal residence.

[InAbLuEsTaTe]

3. Dumb is the word.

[Dawgs]

5. I agree that the $15,000 tax credit is a bad idea, but...

...the price of real estate has already dropped dramatically. I don't know if you've tried to sell a house in the past two years, like many of us that needed to relocate, but we've already dropped are prices by 10's of thousands of dollars.

I would argue that a $15,000 tax credit wouldn't encourage buying much at all.

I would rather see a bill that allowed existing homebuyers the ability to refinance at a much lower rate without paying closing costs. The average homeowner could save $300-$400 a month. That's a real stimulus.

[we can do it]

7. Why a Bad Idea - People Need a Place To Live

The credit will help them afford it. People with shitty credit shouldn't be loaned money, that's half the problem. Also, many peoples jobs depend on closing costs, title agencies, loan officers, etc. How will stiifing them help the economy?

[kypp]

6. Where's help for current homeowners?

[Tennessee Gal]

9. Housing prices have gone down.

Drop in home prices boosts sales

Fast-dropping interest rates and the most affordable homes in more than three decades helped prop up the staggering residential real estate market in December, according to a report released Tuesday.

http://www.bizjournals.com/pittsburgh/stories/2009/02/02/daily26.html

U.S. home prices drop 18% in November

http://www.latimes.com/business/la-fi-home-prices-fall28-2009jan28,0,2414598.story

Housing prices drop at fastest pace ever

http://www.msnbc.msn.com/id/24367064/



Interest rates are low. This is the best time in recent memory to buy a house.

[Occam Bandage]

11. In this thread: hilarious conflation of two meanings of the term "credit." nt

[zulchzulu]

12. The tax credit will stimulate the real estate market

You don't have to worry about real estate prices going down. They are at a high rate in many regions. The assumption that real estate is overvalued therefore a tax credit for purchasing a home is wrong is not seeing what's going on.

I'm convinced that one of the main reasons why the economy and the real estate market are in a tailspin is because of a self-fulfilling prophecy. If all people see or hear is doom and gloom, they don't do anything.

A tax credit from $5000 to $15,000 for a real estate purchase gives some incentive to try to turn the market around.

[phleshdef]

13. Screw that, I'll take the 15,000. I could pay down 10% of what I owe on my house and refinance.

It would help me tremedously.

[AngryAmish]

14. The value of your house will increase about $15,000 this year

Next year it will decrease $15,000. Or maybe the tax credit will become a permanent feature.

So it creates a huge incentive to make people move. I buy my neighbors house...he buys mine and we are both richer for it -- except that the money will be borrowed and paid back by my fellow Americans and child.

You don't get this money unless you buy a house. You do not get the money if you already own your house.

[phleshdef]

16. I'm less concerned about the value of my home and more concerned about paying off what I owe.

[AngryAmish]

24. You are ineligible for this unless you bought a house this year

on edit:

nevermind. You are buying a house this year.

[RollWithIt]

21. Not even close to true....

Actually, its already a given that home prices will depreciate an addition 5% to 10% this year. Tax credit or no tax credit, that doesn't affect the value of the home with the current system.

[Tesha]

15. But as a re-fi, it won't apply to you, will it? (NT)

[phleshdef]

17. Um yea, it will apply to me. You must have misunderstood.

I am a first time home buyer for one thing and am all ready eligable for the current $7,500 credit. If they bump it up to 15,000 or don't, I'm still taking what I can get and am then going to use that plus some savings to pay the principle down on my mortgage. Then I'm going to refinance on whatever principle amount is left over after paying all that down and will hopefully get a lower rate while I'm at it.

When all is said and done, I can probably lower my mortgage by a couple of hundred dollars a month which would make me a happy camper.

[ecstatic]

19. When did you buy your home? Where did

you get info on the 7500 credit?

[phleshdef]

22. i bought it last June, if you got one between last April or this coming June...

Then you are eligible for the 7500 credit as things currently stand. You end up paying it back over a 15 year period by either having more taxes taken out during the year or getting a little less of a return each year. Thats the way our accountant at the company I worked for explained it to me.

But if you just google it, you will find a lot of information.

[ecstatic]

23. Thanks

I don't qualify. Bought mine before *'s epic trainwreck began to take shape.

[RollWithIt]

18. Your comparison doesn't make sense... a tax credit is not the same

As personal credit ratings or bank loaning practices. A person's ability to get a loan has nothing to do with a future tax credit.

[scheming daemons]

20. The Tax "credit" has nothing to do with "easy credit".

You're economically illiterate.

[AngryAmish]

25. Who said it did?

This is a tax credit - say one owes the gov't $20k. A $15k tqax credit means you only owe them $5k.

Credit means loaning money.

My point, and if I was unclear forgive me, is this one time tax credit will artifically raise the value of real estate. Real estate is already overvalued. Raising the cost artifically does nothing to get at the root problem and actually makes it worse. Get it?

[ipfilter]

27. We need to build wealth in this country by making tangable things

instead of relying on real estate. This tax credit is just trying to keep the real estate party going instead of sobering up and dealing with the hangover.

[renate]

29. well, I think the tax credit would help with that, if people start buying houses

The people who are involved in making homes livable--construction workers, painters, etc who would remodel older homes for their new owners, plus manufacturers of carpeting, furniture, and appliances--would get work, and get paid, and want to buy things, which would boost the non-real-estate economy too.

I'm certainly not disagreeing with what you say about making other stuff. But an uptick in home sales would be very good news for some of the industries you're talking about.

[ddeclue]

26. Such a tax credit ONLY benefits the rich with good credit.

Most of us don't even pay 15,000 in taxes a year or even close - and it's very hard to get a loan these days with no job and bad credit for a lot of us.

:argh:

[OPERATIONMINDCRIME]

28. No It Isn't.

And your reasoning as to why is empty and silly.