Just when I thought the housing market was finally being left to correct on its own, I’m starting to hear talk regarding yet another home buyer tax credit. From HUD to the hedge funds, it sounds as if it is gaining steam yet again. This one could involve not just first time/move-up buyers, but a credit for buyers purchasing foreclosed properties or short sales (when the bank allows you to buy a home for less than the value of the outstanding mortgage).
HUD Secretary Shaun Donovan, appearing on CNN’s State of the Union this weekend, didn’t rule out another tax credit. He did say it’s “too early to say,” but then added that “we’re 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.”
After that several Congressional candidates in Florida threw their voices behind the possibility, and Florida Gov. Charlie Crist then chimed in on the same show, saying that another tax credit, “would stimulate the economy. It would increase home sales in Florida.” He finished with: “I would absolutely encourage the president to support that because it would certainly help my fellow Floridians.”
So of course then I went the official route and followed up with a HUD spokesperson who responded: “No news here…there are no discussions underway to revive the credit.”
Is it all political? And is another tax credit the answer? “I don’t think it’s all political,” says housing consultant Howard Glaser. “I think they are panicked that the economy/housing got away from them.” Glaser doesn’t sound convinced the tax credit is really on the table. “They can do a lot off budget with the GSE’s and FHA with no Congress.”
I know a lot of you out there would argue that a housing market correction, as painful as it is, is necessary for housing to truly find its footing again and recover for the long term. Another artificial stimulus could just prolong the agony and set us up for the same drop off in sales and prices that we’re seeing right now.
But it could also move some inventory quickly. With inventories of new and existing homes dangerously high, and the shadow supply of foreclosures pushing that volume even higher, more stimulus could be a necessary evil. I liken it to what I’m doing with my lawn this week. All summer I fought the weeds, pulling them, using the organic sprays and repellents, spreading mulch to deprive them of any air. And then I gave up. I called the lawn service and told them to bring every chemical in their arsenal. Shock the overgrown mess into submission once and for all, so that I can start fresh again and reseed this fall.
As you may know, I have been advertising and promoting the $7500 First Time Home buyer Tax Credit (which is really an interest free loan for 15yrs) expires on July 1, 2009. And there has been very little interest by the general public & buyers.
THIS IS A NEWS FLASH: The new stimulus package may increase that credit to $15K for ANY purchase of a primary home, and IT DOESN’T NEED TO BE RE-PAID!!! This hasn’t been passed yet. But as soon as it is signed into law, I’ll let you know. This is the news from RIS Media today:
“The enhanced $15,000 tax credit offers a powerful incentive for home buyers to get off the sidelines and represents the best opportunity for economic recovery,” said NAHB Chairman Joe Robson, a home builder from Tulsa, Okla. “Congress must make sure that the full $15,000 tax credit remains in the final stimulus plan.”
The bipartisan amendment to the stimulus package, offered by Sens. Johnny Isakson (R-Ga.) and Joe Lieberman (D-Conn.) and approved by unanimous voice vote, would create a $15,000 home buyer tax credit available to all purchasers of a principle residence for one year after its date of enactment. The tax credit would not have to be repaid and buyers could claim it against their 2008 and/or 2009 tax returns.
This could be HUGE for our industry. Stay Tuned.
Thank you for the opportunity to serve you,
Evergreen Ohana Group
5331 SW Macadam Ave, Suite 287
Portland, OR 97239
PS. Your business and loyalty are truly valued. I strive to provide all my clients with the very best professional service possible. If a friend or family member would appreciate this level of service, please don’t keep me a secret!