bostonbubble.com

john p · Joined: 10 Mar 2006 Posts: 1820

I totally guessed... yes?? I saw 88 people had read the post but nobody took a guess.... I guess who has any basis to take a guess, the government is just doing what they want and the big question mark as to what they might do is making a lot of people sit on the sidelines.

I think the original intent was to hold up the price levels of the first time buyer housing stock.

I think this has helped a bit, but things are still fragile.

Honestly, it may be better if they kept it for certain regions versus others, but that wouldn't be fair;;;;; hell none of this is fair though, huh?

balor123 · Joined: 08 Mar 2008 Posts: 1204

It's not really fair that people in certain regions get bigger housing subsidies but you are right that fairness is far from their primary motive.

GenXer · Joined: 20 Feb 2009 Posts: 703

Its like asking how much force should one use to kill a mosquito - 100 pounds or 1000 pounds? Or rather the reverse of that. How much money does it take NOT to have any impact on house buying. This is not what is driving house sales. Correlation does not mean causation (and a bunch of hacks who want to claim credit for 'recovery' can say anything, helped by the media).

Phil O. Math · Guest

The idea is pathetic but, yes, they will absolutely extend this home-ownership subsidy.

It is no more unfair than the mortgage interest deduction that returns a higher amount the higher your income.

If it ever had it, the electorate has utterly lost its ability to think critically.

Phil

Brian C · Joined: 13 Feb 2009 Posts: 98

I voted NO. $8k didn't provide enough to sway FTHB into buying. Even thought I did buy, it wasn't the $8k that made me want to go out and buy. Unlike C4C, people didn't reinvest the credit back into the economy. They either used it for downpayments or paying off credit.

john p · Joined: 10 Mar 2006 Posts: 1820

I have two points, first realtes to regionality and the second relates to the down payment hurdle:

Regionality:

If you look at the Income to House Price ratios, some areas are coming back to reasonable ratios. I am pretty sure it stimulated Washington D.C. area because I know someone looking in the entry level. Massachusetts is also one of them. Within Massachusetts is another thing, however; you have some towns that are much more affordable than others. It would be absurd to give people looking in Wellesley a hand up and not help those looking at say Waltham, but this is why capitalism should kick in and people say, hey Wellesley is overpriced and I can get so much more in this other town so screw Wellesley. The way to let some steam out of regional bubbles is to let capitalism work and let people make the determination to move to lower cost of living areas.

My thought about having a regional aspect to this relates to the fact that areas of California or Nevada, and Florida have P/E ratios that an $8k boost wouldn't help that much. If their fall is 80 feet and you change the fall to 72 feet, they're still street pizza. Massachusetts and D.C. can ratchet down and not crash. The point is how we administer the medicine. If we're going to administer medicine we should treat the affected areas right? What good is it to give people in Austin, TX an $8k handout when their market is perfectly affordable? We didn't give Bailout Money to healthy banks? I know the whole thing is unfair, but if we all are paying for the bailouts we should get past the black and white argument and be smart about how we use the medicine.

One other thing to throw into the mix is that the higher cost of living areas do pay the lion's share of income taxes.

Down Payment:

I think many are down playing the magnitude of the down payment. In years past, people had to come up with 15 to 20%. When I came out of college in 1992 they had gotten rid of rent control so rents skyrocketted, salaries dipped due to a recession, and college tuitions had started to skyrocket. Kids coming out were living at home with their parents and felt like total losers because prior generations could work pumping gas and still pay their rent, buy cars, and go out and have party money. Kids with degrees now were living at home with the parents because after their short salary and STUDENT LOANS, they didn't have much left over and rent was too expensive. Bottom line was that starting out salaries were about $30k, and starter places were about 4 times that and if you could only save say $300 per month it would take like 6.5 years to get the $24k necessary to get to the 20% down payment reach height. Now guess what happened in those 6.5 years? That starter place didn't cost $120k any more, it ended up costing like $200-300k. Sure salaries went up, but so didn't rents and bills. Banks kept lowering and lowering the down payment requirement because NOT ENOUGH PEOPLE COULD COME UP WITH A 20% DOWN PAYMENT. Now, if banks just turn on a dime and raise the bar too quickly with the down payment requirement that swamps out a lot of people beause the day to day micro economics don't foote. I think that the down payment requirement is one that the banks are using to filter out who they want to help or not.

Bottom line on both of these is that people that don't need the medicine are getting stimulus, and the banks have the discretion to filter out who they want so it is helping a lot people that don't need it.

Guest · Posted: Wed Sep 30, 2009 3:29 pm GMT Post subject:

$8k didn't provide enough to sway FTHB into buying.

I guess that's the big question. I don't know if it did or not. Admin, do you know where to find data on the percentage of sales that went to first-time buyers? I'm pretty sure it's up since the tax credit. Of course that doesn't mean that other factors didn't play a role. I'm not sure how to tease that out...

In years past, people had to come up with 15 to 20%.

I wish that came back. After the credit implosion last year, I got serious about my home search again, assuming that buyers would need a decent down payment. I've been waiting for a return to an environment were I'm competing only against first-time buyers with 20% down. I couldn't believe it when my realtor told me that the FHA was handing out 3.5% down loans. The best part is that when those mortgages go bad, I get to bail them out (again).

Renting in Mass · Posted: Wed Sep 30, 2009 3:31 pm GMT Post subject:

The post above is from me. Forgot to log in.

john p · Joined: 10 Mar 2006 Posts: 1820

I forgot to mention that the $8k saved you like a year and a half of saving $500 per month, so sure, the $8k helped with the down payment. The banks are also trying to get their taste by adding points to mortgages and loan fees.

admin · Posted: Wed Sep 30, 2009 3:43 pm GMT Post subject:

john p · Joined: 10 Mar 2006 Posts: 1820

john p · Joined: 10 Mar 2006 Posts: 1820

http://www.youtube.com/watch?v=grbSQ6O6kbs

john p · Joined: 10 Mar 2006 Posts: 1820

Oh, the towns that will have the carnage don't seem to be the towns that most in this website are interested in buying in anyway.

Do you think there will be a lot of sellers in the "immune towns" that are on shaky legs? If so why?

GenXer · Joined: 20 Feb 2009 Posts: 703

$8k is what percentage of the MA median house price? What percentage of the median downpayment?

I rest my case. There is no way $8k played any role in MA, especially with the median staying above $300k. The beauty is that the proponents of this don't have to prove this. They can point to sales and say that it worked despite absolutely any evidence.