It’s starting to sound like, “The Song that Never Ends””¦
On Sunday, HUD Secretary Shaun Donovan implied on an interview with CNN’s Ed Henry that the Obama administration that the $8,000 home buyer tax credit could be revived.
HENRY: Let’s end on two quick points. First of all, along the lines of this debate, there are some critics saying the federal government can’t keep up the intervention to try to prop up the industry much longer. Along those lines, you mention the $8,000 first-time home buyer credit expired a couple of months ago. Many people believe that’s why some of the housing numbers were so bad this past week. Is that housing credit now dead? Or does the administration think you should try to revive it to try to prop this industry up?
DONOVAN: Look, Ed, I think it’s too early to say after one month of numbers whether the tax credit will be revived or not. All I can tell you is that we are watching very carefully. I talked earlier about new tools that we will be launching in the coming weeks, and we are going to be focused like a laser on where the housing market is moving going forward, and we are going to go everywhere we can to make sure this market stabilizes and recovers.
When having tax issues, try to visit the website here for some great help options. Will the property tax credit return? Who knows. But it’s not beyond the realm of possibility”
Should it be revived? Did the tax credit really help the housing industry, or did it just pull in buyers that would have bought anyway? I have already looked for a firm that provides property tax services that is willing to have an interview with me, and I will be asking one of their experts these questions. Personally, I believe we need to give the market time to correct, but I would also love to hear the insight of people much better versed in this than me.
As I wrote on May 1st in, Home Buyer Tax Credit: So long, and thanks for all the fish, and in June 2009’s, How the Government can Fix the “Foreclosure Crisis”, I feel that the government ”“ and We the People ”“ need to understand that housing market will correct itself. Will we like it? Will it be pretty? We’ll have to wait and see.
Here’s an article from CNBC (courtesy of @MortgageProBlog) where the author seems to agree with me. She went the extra step to contact HUD spokesperson who responded: “No news here…there are no discussions underway to revive the credit.” Granted, there are no discussions yet, but anything can happen in D.C. — especially in an election year — and some politicos are already weighing in that reviving the credit may be a good idea…
Hat tip to Inman News on the Donovan interview (this article will slip behind Inman’s pay wall tonight).
The Phoenix Real Estate Guy was started by Jay Thompson, and I have a little blogging problem... he liked to say...
Will the Homebuyer Tax Credit Return?: It’s starting to sound like, “The Song that Never Ends”…
On Sunday, HUD Se… http://bit.ly/bJpxV7
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Will the Homebuyer Tax Credit Return? Should it? New on TPREG: http://tpreg.com/cICF2B
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Amen!!
At what point does this start to be less of a 'tax credit' and more of a governmental subsidy? IMHO, The tax credit shouldn't have been extended the first time….and it shouldn't be revived.
Will the Homebuyer Tax Credit Return? Should it? New on TPREG: http://tpreg.com/cICF2B RT @PhxREguy
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Will the Homebuyer Tax Credit Return? Should it? New on TPREG: http://tpreg.com/cICF2B #taxcredit #realestate
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Think that I have to lobby NAR to take a pass on lobbying for this program. Consumers are currently in a very confusing place and hanging this bone out there would be counterproductive.
@Clint / @Doug – I'm with you guys… But I bet ya NAR gives it the full court press…
Will the Homebuyer Tax Credit Return? Should it? http://bit.ly/agKRHO
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One of the major costs of market tinkering is the sacrifice of trust and good will. NAR lobbied relentlessly for the tax credits (remember the $15,000 demand?) and agents and mortgage brokers insisted that rates would skyrocket later this year. I tremble to think what future goodwill could be traded for more short-term spikes in sales. It is all reminiscent of "buy now or be priced out of the market forever", another notorious industry statement from 2005. A concerted effort among brokers to properly educate their clients and consumers on home-ownership and personal finance WILL NOT remedy the market quickly (because that's all we're interested in these days, isn't it, the quick fix?); but it would go great lengths to helping the market make a durable and sustainable recovery.
The recent surge in home sales and then the subsequent decline did seem to be related to the tax credit. Most people I have talked to seem to agree, including the buyers that were trying to buy a house before it expired and the Realtors selling them a home. The cash for clunkers seemed to jump start the auto industry as well. Just today there was talk of a 2nd stimulus plan. The first one failed, so they want to do it again. I would personally rather see the government stimulate the housing industry with a tax credit than with another failed multi-billion/trillion dollar stimulus plan.
I'm not really sure it helped us here in Southern California. I'm in Orange County and I think the credit was a little to samll to make a big difference but in places like Bakersfield and Fresno it was huge.
Was it really huge in Bakersfield and Fresno? Or did it just pull in people that would have bought anyway, later in the year?
Is there data out there showing that X number of buyers — WHO WOULDN'T BUY OTHERWISE — bought because of the tax credit?
Jay, I wanted to respond, but it was too long for comments. I felt the efforts to legislate band-aids to the current RE market reminded me a lot of the Army Corps of engineers effort to control flooding along the Mississippi River. I posted it at my own blog at http://www.gopherfiles.com. I hope you'll forgive me for hijacking the comments section to link to my post. But know you were the inspiration for it, hands down. And I thank you for that.
New Gopher Files: Recovering from the Real Estate Katrina – http://bit.ly/a8Wjts Inspired by @PhxREguy and his blog – http://bit.ly/aD2dNA
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Have to agree with Clint, Doug and Jay on this. Let the market work it self out. More attention should be paid to loosening lending guidelines for people who can REALLY afford to purchase who have NO LOAN OPTIONS right now, e.g. the stated income loan. Stated income loans were good for people that WERE ACTUALLY self employed. It wasn't made for an E2 in the Military that made an extra $8 grand a month selling bird feeders at the local swap meet! Ahhh, those were the days. HA HA The stated income loan was abused so badly by a few bad agents and loan officers that created so many problems. 🙁
I believe the comments of the HUD secretary may have put every potential and imminent home sale agreement on hold indefinitely.
I can hear the buyers now, "No need to rush, maybe the Feds will reinstate the tax credit."
Mr. Donovan, please do us a favor and don't help us anymore.
The sooner that the government 'gets' that further intervention will only delay stabilization, the sooner that the free markets will right the inherent wrongs of past interferences by Uncle O.
People are not buying because they fear the market hasn't bottomed. So whatever bottom is it needs to get there on it's on free market not anymore government intervention.
Hi Jay ~ Not really sure why this subject is back on the table. It's not a good idea. Until the fear in the marketplace subsides nothing will change. $8000 postponed the inevitable, it really didn't change anything so why revive it?
Plus, interest rates are lower than ever, (4.25% for a 30 year fixed here in Iowa). the price of homes is more affordable than ever too. The market should be in a buying frenzy and it isn't.
What's holding folks back? Probably concern about jobs. If the government wants to intervene it should help small business create jobs not go giving away free money again.
I will be in complete shock if they bring the tax credit back. Look at the hundreds of millions of dollars that the scam artists got from the last tax credit. It's going to happen again and like Jay said… if people want to buy, they will buy. Regardless if there is an 8k tax credit or not. If they buy just to get the 8k tax credit, then i dont really know what to say other than it wasnt a smart choice.
For those of us who specialize in short sales the tax credit buyers will keep us busy in the next few years. I sold one home on the tax credit and the down was borrowed from the parents and the buyer asked for maximum seller paid closing cost. Maybe a few will be prudent and create a rainy day fund but many will just buy furniture. So what happened when an ill financial wind hits them? I also saw too many bad buys being made because the "free money" trumped buying at a good price. No, I don't want to see it again so that REALTORS® can't overeat at the unlimited food buffet and bring more real estate heartburn to our industry.
I definitely think the tax credit helped… even if only a little. I am not a big fan of government intervention, but if I had to choose between another tax credit and another stimulus/bailout plan, I would rather see the tax credit since the money goes directly to the people that need it the most… the home buyers, sellers, realtors, etc.
@robhahn been swamped & had little time to write. Would yesterdays post qualify? http://tpreg.com/cICF2B Yeah, it’s WAY weak but all I have
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I agree with everyone on here that the stimulus should not come back. I do find it on ironic that the gov is trying to stimulate the housing market, while at the same time crimping down on the banks so hard that they can't lend. Which is it? Go or stop?
NOOOOO! This thing wiped out our inventory. I didn't have fun writing 20-30 offers per buyer and I am sure the listing agents didn't have fun receiving 20-30 offers per listing. I don't miss keys stolen out of lockboxes, lines to wait to get in to property, offers not even acknowledged, etc. I would pull tsheets in the am and then RIGHT before I left for showings and disqualify contracted properties. Couldn't rely on list agents and their assistants to give us correct info in a timely manner – because they were just that busy!
I stopped working with first time buyers in mid February. The first question I asked was "are you seeking the tax credit?" If the answer was "yes" I told them I couldn't help them. I had plenty of buyers I was working with for months that I needed to worry about at that point and I didn't need further aggravation.
Our inventory is finally climbing and we should reach stable market territory in the next couple of months. I had a buyer showing today and all ten properties that he sent me on Friday were still active when we had our appointment today AMAZING he has choices 🙂
Buyers will now get closing costs paid which is just a shell game for the tax credit. The banks made out like bandits the way our inventory dwindled – this was definitely a subsidy for the banks to dispose of assets quickly – for top dollar – and for not having to assist with paying buyer's closing costs.
Is it directly related to the tax credit and are there any statistics to prove it? Not sure but our buyer feeding frenzy during the tax credit time indicated to me that it was related!
When will it ever die? The government has got to stop subsidies like this.
I was in sales meeting this morning and when the topic of a possible return of the tax credit came up, there was some applause. I didn't clap.
While the folks who received the tax credit got a good deal and the emergency response aspect of it were a good thing for the moment, reinstating it would be a bad idea. As Jay wrote, buying a house only to get a tax credit is not wise. It's akin to marrying a guy you don't really like all that much just because you want to have a baby before you're 30. It will just lead to an ultimately unfulfilling relationship. And a messy break up.
Things have been tough. But prices in our market seem to have bottomed out even as sales dropped in July. New foreclosure listings every week appear to have stabilized. Eventually market forces will take over again. This has been the case since the first caveman realized his spare mastodon pelt was worth more spearheads if he was the only dude with an extra carcass lying around.
We just have to learn to roll with the flow. And maybe stock up on skins.
The biggest obstacle to recovery in the housing market is the same obstacle to recovery in the overall economy: a reduction in the unemployment rates. We aren't a bunch of babies and mommy (the US Govt.) needs to stop feeding us.
With that being said, i don't think there is even a slight chance that this will actually happen.
It's a blessing and a curse. Encouraged a buyup of inventory, especially in the foreclosure market, which was good. But it was a quick fix. Now sales are slumping again, badly. Why wouldn't it be the same the second time around?
Please don't bring the tax credit back!!! I totally agree that the government needs to leave well enough alone. Many people who took the tax credit aren't going to be able to stay in their homes long enough to break even in our market, and I can see it leading to more foreclosures. It didn't solve anything IMHO 😉 Let the market correct itself.
I can hear buyers across the country telling their agents "I think I'll wait a while for the next government subsidy." What a joke. The truth is, buyers who want to buy right now and are qualified don't need a subsidy and dangling that carrot out there again will do nothing but draw in more people who really don't have the capital to invest in a home. The Feds need to stop trying to fix the market. Like others have said here, the market will fix itself.
In the end, the consumers are the ones that are greatly affected. People in the real estate industry has been slowly recovering from the recession. We need to take things one step at a time.
In my market the credit had a huge affect. It made out April, May, and June sales numbers sky rocket to 40% above normal. But, in July and August, numbers were down over 50%! Obviously this is a sign that the credit sped up buyers rather than creating new buyers. A new credit is just not feasible and would be another band aid on an open sore. Let the market do it's thing and we will all be better off in the long run is my opinion.
The way I see things is that we need to allow the "invisible hand" to do its work. The more government interference the more the people learn to rely upon it. We need to shake of those "chains" that do bind us and work hard to overcome this recession. The housing market was a big part of getting us into this recession. If we are always looking to big brother to bail us out then what keeps America from getting back into this state again?
I will add my vote to the list of NOs – not a good idea.
The market needs to self-correct, as painful as that is. More importantly, I agree that getting $8k to buy a house isn't a good idea if you can't afford to buy it otherwise.
Touche……….too many people looking for the easy button. In my opinion let the market move through the mess. You can't keep pushing the inevitable out to another day
Tax credit was just a band-aid. Unfortunately when the band-aid fell off the wound hadn't healed yet. Instead of putting on another band-aid… Let it dry out!!! Time will heal ALL wounds. 🙂
The market will correct itself just like it always does and people need to realize that.
Oh please no. Please, please no.
I say "No more housing subsidies!" It's time to let the market work and besides, I don't want to pass on the bill to my children. There is opportunity in every market, Realtors who need a tax credit to sell houses should look for other work. I hope the NAR lays off this issue, but I doubt they will.
This is great news. I think that this would be very helpful for continuing to rebuild the real estate market. I live in Arizona and have seen some of the worst of this issue and would love to see our local economy bounce back.
The government sure isn't frugal, is it? They spend their money like a rich, spoiled house wife. Right now the market is leveled out fairly evenly and there doesn't seem to be any need for it right now. Sure, sales are low, but the housing supply isn't rapidly expanding either. If they are going to do it, they should really hold off another year or two and see if it's necessary then.
You said it all right here: 'We need to suck it up, and give the market time to correct.'
Simple economics. Let the supply equal the demand. And let it do it on its own. Without the government trying to poke the demand in order to lower the supply. Just. Let. It. Happen.
We do not need it back. We need the Feds out of our business.