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Original article makes the assumption that a house is an investment in which you can "cash out" at nearly any time like you would stocks, bonds and other equities.
Americans need to forget about the housing boom of the last decade. A house is a place to live. And one day, when you own it outright, you won't be sending off that mortgage payment anymore.
I'm a recipient of the tax credit. I'm likely underwater on my home. I don't really care either. I bought this house to live here. And I bought well within my means such that if I had to take a paycut to continue living in my region, I could still afford it.
IMO, the final word on the tax credit is not written yet. The credit may have given enough incentive for some people on the fence to buy and removed some of the excess supply. When/if the market does return to some normalcy, it may have recovered earlier thanks to a few million(?) homes already removed from the market thanks to the homebuyer tax credit.
According to Zillow the average price of a home in the U.S. is about 8 percent lower than it was a year ago and that it continues to fall about 1 percent a month.
BYE BYE 20K
If you believe Zillow is on the mark........I have a bridge to sell you.....
they have my home valued at over 230K......I bought it less than a year ago for 189K..........they are so off its ridiculous
Original article makes the assumption that a house is an investment in which you can "cash out" at nearly any time like you would stocks, bonds and other equities.
Americans need to forget about the housing boom of the last decade. A house is a place to live. And one day, when you own it outright, you won't be sending off that mortgage payment anymore.
I'm a recipient of the tax credit. I'm likely underwater on my home. I don't really care either. I bought this house to live here. And I bought well within my means such that if I had to take a paycut to continue living in my region, I could still afford it.
IMO, the final word on the tax credit is not written yet. The credit may have given enough incentive for some people on the fence to buy and removed some of the excess supply. When/if the market does return to some normalcy, it may have recovered earlier thanks to a few million(?) homes already removed from the market thanks to the homebuyer tax credit.
Considering the wash of forclosures still to be dumped on the market those few that are still being successfully occupied will make little dent in the market.
Going forward to the inevitable inflation cycle to come, not only will homeowners be facing high morgage rates but they will likely be required to put 20% down as a minimum for any Fannie/Freddie backed mortgage.
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 8K incentive helped boost the housing market when our country needed it the most.
If people hadn't taken advantage of this credit, and lots of homes went unsold, try to imagine how much MORE home values would have fallen? 20%? 30%? Who knows?
This credit gave people a reason to buy homes which helped keep the price drops to a minimum, especially during a time when America was bordering on another Great Depression.
The 8K incentive helped boost the housing market when our country needed it the most.
If people hadn't taken advantage of this credit, and lots of homes went unsold, try to imagine how much MORE home values would have fallen? 20%? 30%? Who knows?
This credit gave people a reason to buy homes which helped keep the price drops to a minimum, especially during a time when America was bordering on another Great Depression.
Obama's incentive plan WORKED !!!
They're going to fall further. It is inevitable, and all the 8K did was buy some time before the next slump.
House prices are still dropping, and I'm still saying "I told you so".
It depends on where you live. People in my area who used the incentive haven't lost anything as home values have either stayed steady or have actually risen. So it is actually not a disaster as Obama haters think.
I take it anyone, including news organizations that "report" the news on obama programs, ideas and failures...are now haters, right?
It is not the place of the federal government to be getting involved in such subsidies and market manipulations to begin with. Get it yet?
You cannot blame farmers for taking advantage of federal crop insurance or CRP payments for not planting as long as the government is incentivising them to do just that. Just as you cannot blame wannabe homeowners for taking advantage of government offered subsidies to purchase a home. Yes, it is the fault of the government for offering the subsidies to begin with.
You realize subsidies only serve as payola for votes to whichever group they are offered, right?
Actually, it's WAY worse than you are saying ... and the motive is not votes ... just more fraud. here is how the game REALLY works:
In a declining market ... the banks know the market is sinking ... and housing prices are falling ... so the government steps in with the tax credit ... that slows down the decline ... and gets warm bodies into mortgages at higher home values. The banks require the purchaser to purchase mortgage insurance, which pays 80% of the loan value to the bank should the borrower default ... and then, as the decline continues, the buyer takes the losses, not the bank. That's just the beginning ... then the bank holding the mortgage packages that paper and sells it to investors as MBS's ... SEVERAL TIMES, making a KILLING, way more than just the original mortgage amount. And all they needed was a warm body to sign the contract ...truth is ... the more likely the borrower is to default, the "Mo Better" the mortgage company likes it, and the sooner the better ... because at default, the bank gets the 80% from the mortgage insurance , and they can then stop making those multiple payments to those multiple investors who purchased that single contract the bank sold several times over.
In other words, it's another gigantic fraud from the friendly banker boys, who have innumerable methods to separate you from your hard earned cash.
According to Zillow the average price of a home in the U.S. is about 8 percent lower than it was a year ago and that it continues to fall about 1 percent a month.
BYE BYE 20K
Actually, according to Zillow, the average price of comparable homes in my neighborhood increased 2.7%.
In my personal situation, I bought my home for $197/sqft and am spending $60/sqft renovating (mix of contractors and me). The average $/sqft in my neighborhood is $412. Since I have a large historic corner townhome, the largest yard on the block, and a high end renovation, I'll be safely north of that number, and comparables put me closer to $450/sqft.
Now even if my house had devalued 2.7% instead, I would not care. I don't lose 20k, and it is truly truly stupid to portray short term fluctuations as realized losses on a long term investment like a house. The 20k I pocketed is real money that would have otherwise been swallowed by taxes.
Again, it's up to the individual to make a sound financial decision. Just because 8k is on the table, doesn't mean that you have to take it. It worked out well for me, and considering the scope of my renovation, it also worked out well for the local economy.
Quote:
Originally Posted by lifelongMOgal
Now please answer this question honestly: Had those taxpayer funded incentives not been there, would you still have purchased the same house and made the same energy upgrades had the money come solely from your own pocket?
No, I wouldn't have. I wasn't really ready to buy a house. It just became clear that if I found a home that was a good value, it was an extremely advantageous period to finance, purchase and renovate. So, I pulled the trigger a few years before I was planning to.
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