Obama $15,000 tax break for first time homebuyers

[HoldAndBuy]

It has to be your primary residence, apparently:

http://www.nytimes.com/2009/02/05/us/politics/05stimulus.html?hp

[propertymanager]

That sucks!!!  I thought that the government promoting "homeownership" is what got us in this mess in the first place.  Now, apparently the've decided that the cure is the same as the disease.  Why can't the government just BUTT OUT!

Mike

[HoldAndBuy]

I don't think it will work. The kind of people it will attract will have difficulty qualifying for mortgages these days.

[Bluemoon06]

This is the answer to my prayers.  I will go out and buy a house!!

[phlemboy]

It may sound like a good idea but that 15k would be going to a very small pool of people.

1. They'll need to have stable jobs.
2. They'll need good credit.
3. It would have to be their first home (depending on the definition of first time homebuyer). They may consider them a first timer if they haven't bought a house in 5 or 10 yrs. Although I've also heard that it may apply to any homes bought within a yr.

I just don't see enough people qualifying for this to make much of an impact on the economy. I find it interesting that now that people are saving more and spending less, like they should, it prompts our business and govt. leaders to find ways to get the consumer to go back to their reckless ways of money management. 

[phlemboy]

After a little digging I found that it applies to all home sales within a yr. That's good news for me since I plan to buy a larger home within a yr. We'll see how the final version looks when it becomes law.

[Bluemoon06]

You know if we look at how economies work it is basically people buy goods that means that goods have to be manufactured and sold thus creating jobs for the people that make and sell those goods.  The people that sell and manufacture these goods then have money to buy goods etc.  You all know the drill, when we buy a house we create jobs in construction, materials plastics appliances etc.  And now that we have a brand new house we need a brand new car to put in our brand new garage so we create jobs for rubber, steel, glass, etc.  So in order for us to get out of the recession we have to spend.  The way the USA’s economy is set up (high consumption rate low savings rate) that means debt.  But we are at our debt limit new.

In order to fix the problem in a real since we have to rearrange our economic model.  We need to increase the savings rate but this causes the consumption rate to fall causing massive unemployment.  There is no politician that will do that.  What has to happen is we need to find a way to ramp up manufacturing (increase jobs) but encourage people not to consume (decrease debt) while they are employed manufacturing these goods.  The only environment that this exists is in a state of war.  But you say we are in a war.  No my friend we are not.  We are in a police action.  In a police action we don’t break enough stuff to create a demand that can affect the economy.  We need the kind of war that the US people don’t have the stomach for.  This kind of war breaks a lot of stuff causing us to manufacture a lot of stuff and it kills a lot of our kids thinning out the work force.  It also scares people out of buying things and encourages the hording behavior which allows the savings rate to rise again.

With Obama carrying around that danged olive branch I don’t know if we will get there.

[phlemboy]

If consumers can't consume without going into debt, that's a huge problem. Which is what we have. Eventually the well runs dry and the economy collapses. In time, I believe people will have short memories and return to their buy now pay later ways. There will be some who learn their lesson, but most won't.

[Bluemoon06]

If consumers can't consume without going into debt, that's a huge problem.

Bingo.  That is exactly what we have.  Look at the posts on this site.  Everybody is broke.  Real estate is sold that you can do it with no cash and no credit because every body has no cash and no credit.  This site if full of people without 2 nickels to rub together wanting to buy a $1million worth of real estate.

I said 5 years ago that if you look at my neighborhood you would think that everybody here is rich because we live in big houses driving (at that time) Lexus RX 300s.  They were everywhere like ants.  But what we actually had is a neighborhood full of mortgages and debt.  I figured it out when I would ask a neighbor for some cash for one thing or another and none of them ever had any. 

[investorman]

The $15,000 credit is an attempt to prop up prices again. I don't think it should be the government's job to prop up values of privately held real estate. Even if prices get a boost in the areas where they have declined it's not going to go back to the prices in the "boom years" therefore all these people will still be "at risk of foreclosure" because they are still going to default on their homes because they figure they can default , rent for 2 years or whatever and then buy another home in a few years when prices are cheaper (in their minds).

I think the loan modifications, etc are mostly a waste of money and time.

It seems home ownership(especially at a low price ..in some areas) should be an incentive enough for someone to buy a home..I don't think we should be giving credits or 0% loans to people to buy  a home.

[rookieNYC]

Bingo.  That is exactly what we have.  Look at the posts on this site.  Everybody is broke.  Real estate is sold that you can do it with no cash and no credit because every body has no cash and no credit.  This site if full of people without 2 nickels to rub together wanting to buy a $1million worth of real estate.

For the first time I agree with you %100 Bluemoon...Couldn't have said it better myself...

[propertymanager]

Bingo.  That is exactly what we have.  Look at the posts on this site.  Everybody is broke.  Real estate is sold that you can do it with no cash and no credit because every body has no cash and no credit.  This site if full of people without 2 nickels to rub together wanting to buy a $1million worth of real estate.

I have to disagree, at least as it pertains to the REIClub forums.  I don't recall a single unchallenged post on here saying that you can be successful in REI with no cash and no credit.  Quite the contrary.

As to there being a lot of wannabes with no money, that's certainly true of all REI/Stock Market/MLM/Home Business websites.  People want to get rich quick and they don't want to work for it!

Mike

[furnishedowner]

I agree that it is short-sighted for the government to give away money to buy homes.

I would rather have them spend the money on WPA-type projects. Our town has a beautiful big park and an art museum, all done in the 1930's with WPA money.

Instead, infrastucture like replacing our aging bridges, rail lines, and national parks and highway upgrades could provide JOBS. Then people have money to buy homes.

Furnishedowner

[Bluemoon06]

The economic stimulus package was passed February 6.  Caterpillar announced layoff of 20,000 workers January 26.  Why would the largest manufacturer of construction equipment lay off a whole city worth of workers less than a week before congress is about to pass a law to fund a trillion dollars worth of infrastructure projects?  They wouldn’t.  They read the bill and realized that it is a big blob of pork.

[phlemboy]

I'm hearing that any stimulus will take take months to actually get to these projects. Perhaps CAT is laying off in order save money until their needed. They can always recall employees that haven't found work. I'm not sure that infrastucture spending will create a meaningful amount of jobs. How do we know that companies doing the work are ACTUALLY hiring to get the work done instead of using the employees they already have? When it comes to stimulating homebuying, I think they should take rates down to 3 or 4 % for a FICO of 700 or better. Add that to the tax deduction and falling home prices and you could get qualified buyers with stable jobs back into the market. I realize that the # people who qualify is declineing, but I like the idea of rewarding people/lenders who didn't get in over their heads by greed.. I'm also in favor of these things because I'm looking to buy a larger home in the next year or so ..