Comments on: The New Homebuyer Tax Credit

By: Matt Keegan

Matt Keegan — Fri, 13 Nov 2009 11:20:01 +0000

That’s a lot of money being expended to help people get a home. Plus, our national debt is mushrooming with each tax credit.

I think that the federal government needs to stop tinkering with the economy. Booms and busts come and go no matter what the politicians do. However, by pouring money into the housing sector our national debt will continue to rise, saddling future generations with a heavier debt load.
Matt Keegan´s last blog ..Divorcing Your Clients 101

By: Mike

Mike — Thu, 12 Nov 2009 00:56:26 +0000

Thanks Laurie. I don’t have any great insight but by most accounts credit is still extremely tight with credit card companies jacking some rates up to 30%. Banks will not offer mortgages even to excellent credits because of the difficulty/impossibility of reselling those mortgages to bundlers who created the infamous mortgage-backed securities. I haven’t heard much grumbling about ongoing irresponsible lending practices but there are always those looking for a fast and easy dollar.

By: Laurie

Laurie — Wed, 11 Nov 2009 17:24:03 +0000

Good article, Mike.

Haven’t we been here before? The Bush administration and Congress brought us The American Dream Act and Zero Downpayment Act that effectively brought millions of new buyers to the homeowner table. Many of these people were not financially prepared to maintain their homes nor their ridiculous loans, and millions of homes are now “upside down” in equity. In short, this government meddling in a financial sector encouraged many who were not ready for homeownership to get in the game , and our real estate market is suffering the consequences as those with literally nothing to lose bail on their homes.

You make a good case that most of the credits have gone to those who were already planning to buy. I wonder, though, how many of the 400,000 buyers who were lured by the program are just as financially ill-prepared to be owners as those who took advantage of Zero Down payment et al.

I also wonder about current lending practices and standards. Much noise has been made about the tightening of credit markets, yet many still quesiton whether irresponsible lending is still too prevalent. Do you have any insight in this?

By: LD Jackson

LD Jackson — Wed, 11 Nov 2009 11:15:59 +0000

Very good article, Mike. As you, I am no economist, but it seems plain to me that there are much better ways to stimulate the parts of the economy that need stimulating. If you ask me, they have this all backwards. Let me explain.

How are people supposed to purchase a new home or some other major item, if they do not have a good job? The answer is large tax credits from the government, of course. (Sarcasm fully intended.) They seem to be trying to stimulate last things first. If they would focus on trying to stimulate jobs, then doesn’t it make sense that home purchases would go up, once the jobs have recovered?

They are trying to send the cart down the road before the horse is even out of the stall.

By: Ron Russell

Ron Russell — Tue, 10 Nov 2009 23:13:31 +0000

This will be a short term benefit to the housing market, but a long term threat to the national debt and will in the end put some people into homes they cannot afford. The government simply cannot pay for your house or even a portion of it. Putting more money into circulation will in the end lead to higher prices and higher interest rate in a vain attempt to control what will become run-a-way inflation in the near future.
Ron Russell´s last blog ..The Second Shooter at Ft. Hood: Extreme Political Correctness