How the $8,000 Tax Credit Cost Home Buyers $15,000

[MaggieMae]

I'm sorry, but whatever happened to the days when folks saved up down payments of 10%-20% or even more for a house and waited until they knew they would likely be in a place for at least 5-10 years and didn't use their equity as a piggy bank and planned to actually own the house outright at some point?

Now people buy homes with as little down payment as possible with no real commitment to living in the house for any length of time and they cash out their equity every chance they get. The same attitudes that helped bring down the housing market still persist.


A home isn't an "investment" in the way the real estate agents want you to think of it as - if its your HOME its value to OTHERS should be irrelevant, only its value to YOU should matter. If you bought a house 2 years ago with the credit hoping it would be worth more now so you could either sell it for a profit or cash out on some equity - then guess what? YOU ARE A MARKET LOSER, DEAL WITH IT. If you bought a home to live in 2 years ago and you're stilling living there and not expecting to need to move any time soon and not expecting to use it as a piggy bank - then you shouldn't be worried about the price decline.

Whatever happened to the formula banks used to use of a mortgage payment being no higher than a third of your monthly income? I remember the first house we wanted to buy, filled out the application and related paperwork for lender approval, and it got bounced for that reason. So we went shopping for a lower-priced home and found one. That's the problem with the whole mess. BANKS (deposit banks) began competing with store-front mortgage lenders who changed all the rules in order to scam people and pocket obscene profits.

Same thing with credit card companies that offered a card to people with bad credit, but were able to rake in enormous profits off the high interest alone. They could write off the principal as a bad debt.

Credit was so easy to obtain that low-income, middle-income, and high-end, middle-income people went on a spending spree of buy now, pay later, and wound up in debt up to their eyeballs. Everyone wanted a piece of the action. And the ones who made out like bandits were...the bandits selling the easy credit.

 

[MaggieMae]

And now it's gone. That worked out great...a temporary transfer of taxpayer money, a loss of equity for the chumps, and more public debt.

It's gone? Where'd it go?

Hint: It went into the economy.

Hint: Housing prices are lower. The subsidy went nowhere but down the toilet.
But again, we are arguing economics with someone who thinks consumer spending is the key to recovery.

Oh dear. Seems even the WSJ thinks so.

Consumers hold key to economic recovery - Columns

Nobody wants to see another period of unbridled spending and speculation leading to an unsustainable financial bubble -- and another recession. But if there is to be an economic recovery, it will be fueled by consumers. And if that recovery is going to be sustainable, it must be fueled by cash rather than debt.

Or if that's not enough proof, take your pick:

Consumer spending key to recovery - Google Search

 

[MaggieMae]

The tax credit saved the housing industry.

Believe me, I know from personal experience.

And the tax credit was the brainchild of Republican Senator Johnny Isakson of Georgia.

But don't let the facts interfere with your mythology.

Hey bucko, note to self, the housing industry is in the shitter.

Nobody every claimed that it would bounce back overnight. But it's showing signs of improvement. Bucko.

NAHB: Housing Starts, Housing Forecast

 

[MaggieMae]

Fuck'n dumb Texas queer, I mean steer.

Grow up asshole.

 

[MaggieMae]

It's already been consumed with a net negative return due to the loss of wealth. And all we have left is THE DEBT.

A net negative return?

How the hell did you calculate that? Don't worry, I can keep up...

If you buy something and its value goes down, that's a net negative return. Genius.

So what DOESN'T go down in value once purchased? Speaking strictly of consumer products. This is a non-argument.

 

[Provocateur]

The Further Adventures of Obamanomics!

How the $8,000 Tax Credit Cost Home Buyers $15,000:

The government's recent $8,000 cash incentive for first-time home buyers has proved even more costly for recipients than for taxpayers, according to data released Monday. Typical buyers have lost twice as much to price declines as they received from the program.

The median home value fell to about $170,000 in March from $185,000 a year earlier, according to Zillow.com. That means a buyer who closed on a house just before the tax-credit program expired in April 2010 collected $8,000 but has since lost $15,000 in value. Those who bought earlier in the program have done worse; the median price is down $20,000 from March 2009.

"The $8,000 first-time home buyers tax credit . . . has brought many new families into the housing market," the White House boasted in November 2009 upon announcing an extension and expansion of the program. Judging by sales declines since, that seems beyond doubt. Over the past year, the pace of existing home sales has fallen more than 6% and that of new home sales has fallen 22%.

The credit wasn't great for taxpayers, either. IRS says it paid $26 billion in home buyer credits in 2009 and 2010, enough to cover the maximum $8,000 credit for more than 3 million buyers. (It says at least $513 million went for fraudulent claims. Some claimants hadn't bought houses. Some filed twice. Some were under age 18 or incarcerated.) ...

How the $8,000 Tax Credit Cost Home Buyers $15,000 - SmartMoney.com


How much more proof do Progressives need to see that their central planning, social engineering, Big Government policies always end up doing far more harm than good?

I'm really looking forward to Obamacare.

 

[Provocateur]

The government's recent $8,000 cash incentive for first-time home buyers has proved even more costly for recipients than for taxpayers, according to data released Monday. Typical buyers have lost twice as much to price declines as they received from the program.

Interesting that you post this today. I just got my latest property assessment from my county in the mail today and my property value has dropped yet again, for the second time in three years.

Means less in property taxes. You are better off unless you want to sell your home any time soon.

 

[Care4all]

if these people had rented the previous 18 months instead of owning their home, at $1000 a month rent, they would have lossed 18k vs the 15k the article speaks of....or does having a roof over ones head account for something?

 

[Provocateur]

Good point.

GM is doing quite well and is in line to be the number one auto company in the world again.

Obama and Congress saved the economy with the bailout and the stimulus package.

'challenged' is to light a word for your condition.

Hardly.

When an economy is in a deflationary spiral, the government must be the demand of last resort. Congress and Obama recognized that fact and turned things around.

Saved us from a second Great Depression.

Chris, you do understand that all economists predicted that the recession would subside in 2009, right?

All that Obama and Congress did was provide kick-backs to unions and added to our national debt.

That and propped things up temporarily to postpone and prolong the inevitable.

 

[Care4all]

'challenged' is to light a word for your condition.

Hardly.

When an economy is in a deflationary spiral, the government must be the demand of last resort. Congress and Obama recognized that fact and turned things around.

Saved us from a second Great Depression.

Chris, you do understand that all economists predicted that the recession would subside in 2009, right?

All that Obama and Congress did was provide kick-backs to unions and added to our national debt.

That and propped things up temporarily to postpone and prolong the inevitable.

NO ONE predicted this recession would subside in 2009....all I heard was it was the "great recession" from all economists that I read.

 

[MaggieMae]

Hardly.

When an economy is in a deflationary spiral, the government must be the demand of last resort. Congress and Obama recognized that fact and turned things around.

Saved us from a second Great Depression.

There was no cash (except maybe in Swiss Banks or the Caymens), no credit, paper assets were worthless. The only way an infusion of money to save our economy and end a coming run on banks worldwide was for the US Government to do it. Did it stink that it was necessary? You bet.

Being able to go to the bank and withdraw any or all of their funds on all but a dozen or so weekdays out of the year is something folks take for granted. They don't seem to understand that the big evil bank doesn't actually have their money.

At least in the US, they would have had to tap gold reserves just to pay FDIC coverage. I often wondered how that would happen? Who would be chosen to be first in line until gold also ran out?

 

[MaggieMae]

Maybe you should go back and ask all the republicans who were talking about how great the economy was back in 2006 OPPD?

Unemployment rate: <5%
Inflation rate: <2%
Gas price: $2.59

Yeah. Team Obama would kill to get those kinds of numbers today.
What was your point, witless one?

You continue to try to convince yourself (and others) that nothing carried over. The economy began to seriously tank in the summer of 2007 and came to fruition when by the end of December 2008, 1.4 million jobs had already been lost due to the panic on Wall Street resulting from major banking institutions going belly up, one by one.

Do you honestly believe 2009 began with a clean slate that Obama messed up?

 

[Provocateur]

Man, if you didn't have money for a down payment and couldn't document that you have sufficient income to PAY THE MORTGAGE, INSURANCE, AND TAXES maybe you shouldn't have bought a fucking house.

If you can't afford it, don't buy it.

Most folks who get into this mess could afford it fine when they bought it.


Why the heck isn't the home loan market set up more like the real estate market itself? In the real estate market there are agents to represent buyers and sellers, and the agent is supposed to represent the interest of their client. With the home loan market there's no one to represent your interests but yourself, its you vs. the bank. Would be great if you could get a buyers-side loan agent to help you select a bank to get the loan from, do the footwork for you, and help you understand all the legal mumbo jumbo - just like with a buying agent with the actual home.

It's incumbent upon the buyer to research lenders in their area and go on reputation of those in the know.

People that walk in blind are asking for trouble. Our financial lender does as much, if not more, than our real estate agent.

 

[Care4all]

Maybe you should go back and ask all the republicans who were talking about how great the economy was back in 2006 OPPD?

Unemployment rate: <5%
Inflation rate: <2%
Gas price: $2.59

Yeah. Team Obama would kill to get those kinds of numbers today.
What was your point, witless one?

You continue to try to convince yourself (and others) that nothing carried over. The economy began to seriously tank in the summer of 2007 and came to fruition when by the end of December 2008, 1.4 million jobs had already been lost due to the panic on Wall Street resulting from major banking institutions going belly up, one by one.

Do you honestly believe 2009 began with a clean slate that Obama messed up?

I'm certain he believes in the clean slate.... in fact, all republicans seem to believe in it, as of late....except of course when it comes to them taking over, then it will be something "they inherited".....

happens on both sides of the aisle, I suppose.

 

[MaggieMae]

'challenged' is to light a word for your condition.

Hardly.

When an economy is in a deflationary spiral, the government must be the demand of last resort. Congress and Obama recognized that fact and turned things around.

Saved us from a second Great Depression.

Chris, you do understand that all economists predicted that the recession would subside in 2009, right?

All that Obama and Congress did was provide kick-backs to unions and added to our national debt.

That and propped things up temporarily to postpone and prolong the inevitable.

The recession did end in 2009. Since then we've been in recovery mode, which every economist alive has said will be a long slog. But far too many people think the economy should have bounced back immediately, everyone would be back to work at excellent salaries, warm and comfy in affordable homes, 2 cars in every garage by now and gas prices below $2.00 a gallon. Wouldn't it be nice if dreams were reality.

 

[MaggieMae]

If you can't afford it, don't buy it.

Most folks who get into this mess could afford it fine when they bought it.


Why the heck isn't the home loan market set up more like the real estate market itself? In the real estate market there are agents to represent buyers and sellers, and the agent is supposed to represent the interest of their client. With the home loan market there's no one to represent your interests but yourself, its you vs. the bank. Would be great if you could get a buyers-side loan agent to help you select a bank to get the loan from, do the footwork for you, and help you understand all the legal mumbo jumbo - just like with a buying agent with the actual home.

It's incumbent upon the buyer to research lenders in their area and go on reputation of those in the know.

People that walk in blind are asking for trouble. Our financial lender does as much, if not more, than our real estate agent.

Except the mortgage hawks acting as financial advisors drew in unsuspecting people (just like real financial advisors sometimes do with millionnaires who aren't experts) by promising that even if a person would struggle making the initial mortgage payment, with housing at an all-time high, they could easily refinance in a few months. A lot of people fell for their shtick. Was that stupidity? Yes, and the hawks knew that. They preyed on those very people who wouldn't understand.

 

[MaggieMae]

Unemployment rate: <5%
Inflation rate: <2%
Gas price: $2.59

Yeah. Team Obama would kill to get those kinds of numbers today.
What was your point, witless one?

You continue to try to convince yourself (and others) that nothing carried over. The economy began to seriously tank in the summer of 2007 and came to fruition when by the end of December 2008, 1.4 million jobs had already been lost due to the panic on Wall Street resulting from major banking institutions going belly up, one by one.

Do you honestly believe 2009 began with a clean slate that Obama messed up?

I'm certain he believes in the clean slate.... in fact, all republicans seem to believe in it, as of late....except of course when it comes to them taking over, then it will be something "they inherited".....

happens on both sides of the aisle, I suppose.

Inherited, yes. Let's dissect the Reagan/Bush43/Clinton/Bush41/Obama trail.

 

[The Rabbi]

if these people had rented the previous 18 months instead of owning their home, at $1000 a month rent, they would have lossed 18k vs the 15k the article speaks of....or does having a roof over ones head account for something?

Math challenged much?

 

[boedicca]

A net negative return?

How the hell did you calculate that? Don't worry, I can keep up...

No you can't. The answer is in the OP, which you clearly don't grok.

I "grok" the OP just fine, thanks. So perhaps you can tell me how you calculated a net negative return on investment.

Could you possibly be any STOOPIDER?

If you pay $100 for a stock and it goes down in value, your net worth has dropped by $15. It doesn't matter that somebody gave you $8 to add to your $92 to pay or it in the first place.

The owner of the house is still on the hook for the mortgage, and has likely lost most of his down payment.

How Hopey Changey is That!

 

[Provocateur]

Hardly.

When an economy is in a deflationary spiral, the government must be the demand of last resort. Congress and Obama recognized that fact and turned things around.

Saved us from a second Great Depression.

Chris, you do understand that all economists predicted that the recession would subside in 2009, right?

All that Obama and Congress did was provide kick-backs to unions and added to our national debt.

That and propped things up temporarily to postpone and prolong the inevitable.

NO ONE predicted this recession would subside in 2009....all I heard was it was the "great recession" from all economists that I read.

Totally untrue.

Either you were listening to incredibly biased reporting, or not really gleaning what was to be expected.

No offense intended.

Although unemployment is only a portion of our economy, even Obama's stimulus pitch showed a deceleration in 2009.

September Unemployment: The Job Loss Accelerates « Innocent Bystanders


Of course, to a person that is conservative by nature, I would suggest that the housing market continues to falter based, in large part, to the agenda of the progressive left.

You must be honest in admitting that this is one of the most business unfriendly administrations in history.

Before Obama was elected he discussed how his policy on fossil fuels would bankrupt the industry. If you want, I can link that for you. Those are his words. Do you think that intentionally causing higher prices will not hit everyone? Again, he says that industry will pass their pains onto consumers. Again, his words.

So people/businesses take their money/businesses overseas, more people become unemployed, lose their homes, live off of unemployment benefits or go on welfare....and it keeps spiraling down.

How anyone thinks that this administrations policies have somehow helped our economy is astounding. Perhaps that individual believes in the ideological principles of being "progressive" as opposed to actually looking at the outcomes.