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news · Joined: 14 Jul 2007 Posts: 0 Location: Greater Boston

Use this forum thread to discuss the following link.

Description: Bill introduced to extend and expand homebuyer tax credit
URL: http://www.biggerpockets.com/renewsblog/2009/08/31/first-time-home-buyer-tax-cre ...truncated...
Info/Broken?: http://www.bostonbubble.com/link_info.php?id=2533

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admin · Posted: Thu Sep 03, 2009 9:32 pm GMT Post subject:

This despite the fact that the cost of the credit to the US is quite a bit higher than $8K. Based on The NAR's numbers, the tax credit is costing us $43K per marginal home sale:

http://www.calculatedriskblog.com/2009/09/first-time-home-buyer-nar-numbers.html

- admin

Renting in Mass · Posted: Wed Sep 09, 2009 1:04 pm GMT Post subject:

I'm shocked Rolling Eyes

My agent reminds me every time I talk to him that I need to act fast to take advantage of the tax credit. Like getting a credit worth 2% of the purchase price is going to be the driving factor in my decision of when to buy! I still can't get over the fact that people spending 3 or 400K get all excited about 8,000 bucks.

Brian C · Joined: 13 Feb 2009 Posts: 98

balor123 · Joined: 08 Mar 2008 Posts: 1204

This problem exists in other industries as well. Many people who were going to buy anyway end up just paying less. After the coupon goes, people learn to wait for the next one, especially if there's talk of another and I suspect there will be for a long time. If they aren't careful, then these will have to become permanent. Houses will become like cars. Have you ever been to a car dealership that wasn't running a sale?

admin · Posted: Thu Sep 10, 2009 2:06 pm GMT Post subject:

It does help sway some people who wouldn't have otherwise bought, though. That leads to increased demand, as evinced by The NAR's data. That increased demand could easily lead to prices being higher than they would have otherwise been by more than the $8K credit. I think that's exactly what happened if you look at the Massachusetts median for 2009 compared with previous years. However, I wouldn't expect that effect to persist if they keep renewing the credit since the sense of urgency will fade. The credit actually makes buyers come out behind, in that case, assuming increased demand contributed to higher prices. As usual, the actual beneficiaries are the lenders and sellers cashing out.

- admin