I have heard from many articles and talking fools alike that the bottom in housing has come. I find it extremely hard to believe that a bottom in housing has occurred, I think there is still an easy 15-30% drop in housing prices coming. The confusing part about this whole tax credit situation is that the fools and idiots who believe the bottom is in are the ones hoping they expand it into 2010 offering not $8,000 but $15,000 worth of tax credits to buyers. Now why would anyone who believes strongly about the bottom in housing being near ask for more free handouts. Its just like the fools who say the economy is turning around and that GDP is going to grow at 3-5% next year yet they want the fed to keep rates at 0% and the printing presses running. This is not a recovery people, this is free monopoly money being poured into an upside down economy hoping to turn things around by stimulating an economy that's totally exhausted. When will anyone understand that propping up the system with worthless dollars isn't the way to bring back growth. This isn't a true "V" shaped recovery, but the beginning of a long "L" shaped recession. First-time home buyer tax credit set to expire Robert Selna, Chronicle Staff Writer Wednesday, September 30, 2009 (09-29) 20:28 PDT -- The $8,000 federal tax credit for first-time home buyers is soon to expire, causing anxious house hunters to hustle and prompting a debate in Congress over extending a program that some say is central to the fragile real estate recovery. Images Nicole and Jared Kitchen, with son Dillon, say the tax re...Nicole Kitchen, with son Dillon, says the tax rebate help... View Larger Images More Business * Bank strikes deal over discriminating car loans 09.30.09 * Brazil architect Niemeyer undergoes tumor removal 09.30.09 * LA Times, Washington Post breaking up news service 09.30.09 * Tate's sister: Polanski won't get fair US trial 09.30.09 The rebate is available to anyone who has not owned a home in the past three years. The government introduced the program in February as part of the stimulus package, and several studies estimate that by the Nov. 30 expiration date, it will have spurred several hundred thousand home sales. The real estate industry in California and across the nation is lobbying Congress to extend the credit through next summer. Meanwhile, local Realtors and prospective buyers are eager to complete sales - which sometimes take months - not knowing whether the credit will be continued. "The refund has had a tremendously positive impact," said James Liptak, president of the California Association of Realtors. "Home prices are down considerably, and one of the big things that has made people jump into the market is the credit." Critics argue that American taxpayers are simply footing a windfall for purchasers who would have bought homes anyway. Real estate industry statistics suggest that approximately 1.8 million people are expected to receive the credit. They also indicate that the rebate spurred 350,000 home sales. "That means that about 85 percent of the people who got the credit were already going to buy homes," said Ted Gayer, a Brookings Institution economist who focuses on housing and public finance. "The idea of a subsidy is to get people to change their behavior. This subsidy costs a lot of money and is only getting small number of people to change their behavior." New homeowners Nicole Kitchen and her husband, Jared, said the tax rebate was a significant factor in pushing them to buy their Martinez house this summer. The credit allowed them to purchase a new washer, dryer, refrigerator, stove, television, two couches and other furniture. The couple amended their 2008 taxes and received the benefit almost immediately. "We would have had to pay for the new things with a credit card or put a smaller payment down on the house," said Nicole Kitchen, a 31-year-old teacher in Martinez. "This is a great way to boost the economy." The Kitchens had additional motivation for buying a house, including the fact that the couple's first child was nearly a year old, interest rates were low and prices had fallen dramatically from years past. Members of the House and the Senate have proposed more than 20 bills to extend and/or expand the credit. A proposal by Rep. Ken Calvert, R-Corona (Riverside County), mirrors a bill sponsored by Sen. Johnny Isakson, R-Ga. The lawmakers want to offer the tax credit for another year, increase it to $15,000 and make it available to any buyer who stays in a home for at least two years. Gayer from Brookings estimates that such a program could cost $30 billion. As it stands, the government is on track to spend $15 billion. "California needs to stimulate demand; there's a lot of inventory out there and increasing the program to $15,000 could help (decrease) some of that supply," said Calvert's spokeswoman, Rebecca Rudman. Others agree. They say that extending the tax incentive program is worthwhile given the importance of the housing market to the overall economy and the relatively small cost of the credit. The housing market is unpredictable. It slumped in August after four months of gains. Nationally, sales of existing (not new) homes dropped 2.7 percent. The Bay Area saw a 15 percent decline. Additional foreclosures also are on the horizon. In 2010, many option adjustable rate mortgages, which were popular in the Bay Area, will begin to readjust. When they do, borrowers will be hit with much higher monthly mortgage bills, possibly triggering the next big wave of foreclosures. "The economy is trying to gain traction and the housing market is a big piece of that," said Mark Zandi, chief economist at Moody's Economy.com. "We are likely to have a lot of foreclosures next year, so it's good to give everyone who wants to buy a chance to buy." Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/09/29/MNCH19U14D.DTL#ixzz0SeLwRQJp
I'll buy when one year of my salary covers off the entire cost. Seriously, by the time the housing market has done correcting -- buying on credit will basically be unheard of. Every asset class goes through the same sort of cycle with respect to the credit that is granted against it. At one extreme end is extreme leverage. At the other extreme of valuation is when people would only consider using a small amount of cash savings to buy.
why not put it to 15K. Not only do you get some homes for no money down, heck you may get cash back at closing to buy more junk for it! More, more, more!!!
I think alot of people are buying now because its cheaper to buy than to rent now. Thats always when you are supposed to buy. Only fools and Idiots think a house is an investment.
There are morons out there who will just lie to themselves in order to make their situation seem better instead of actually look at the problem, this is part of it. I had an argument with some random person on the internet once as you do who thought that the U.S was coming out of the recession, this is just basically the equivalent of the eye of the storm in a hurricane. The majority of the people recognize we're in a crisis but there are alway going to be a few stupids out there who will go out thinking they know better and then suddenly get wrecked by the crisis themselves.
I'm in Northern CA and there are plenty of houses here that 1 yr salary will cover the entire cost. The question is...would you really want to live there? There are plenty of other places where you can pick up a house for dirt cheap. You can get alot of houses in detriot for 1k. But do you really expect to buy an average house for 1 year salary in the rest of the country? If you do, you will never own a house. In 1930 the average brand new home cost $7,150. Average income was $1,970. Income/house ratio 3.62 1940 new house was $3,920 and income was $1,725 Income/house ratio 2.27 1950 new house $8,450 and income was $3,210. Income/house ratio 2.63 1960 new house $12,700 and income was $5,315 Income/house ratio 2.38 1970 new house $23,400 and income was $9,350 Income/house ratio 2.50 1980 new house $68,700 and income was $19,170 Income/house ratio 3.58 1990 new house $123,000 and income was $28,970 Income/house ratio 4.24 2000 new house $134,150 and income $40,343 Income house ratio 3.32 If my number are right for today(and I'm doing these numbers from memory) average home price is 178k and average income is 49k which gives a income/house ratio of 3.63. Could we go lower? Sure, its possible, but not much lower. If we go back to the gold standard then we will see houses go back to the 2-2.50 ratio range. We will never go 1 to 1 ratio though. Housing is pretty close to the bottom. The numbers above prove it Since we have been off the gold standard, you can see the average person is willing to pay between a ratio of 3 to 4 for a house (higher in boom times)
Housing used to be an investment, but not anymore. Now, the useless city officials are raking up the taxes to screw up the home owners for all they got. There is a whole gang of con artists ready to pillage the home owners: 1. Mortgage salesman 2. Mortgage banker 3. Carpenters, Plumbers charging $100 an hour 5. Realtors - the worst of them all 6. Estimators 7. Inspectors 8. Pest Control 9. City Officials Pretty soon, all the money one makes goes to feed these monsters. If one does not have a family, stick with the renting, but if you have a family you do need a house.
you're forgetting the effects of: 1. Increased local tax rates. Another nail in the coffin for larger home purchases (precisely the ones which are most underwater now) 2. Repeal of federal mortgage deductibility. Gotta finance the deficit somewhere, right?
Housing has bottomed in most areas. but overall the prices will stay flat in the face of higher rates, tighter credit, vs asset inflation demand of the FED. Still this current moment with such low rates and desperate sellers is not a bad time to buy.
Pretty soon, all the money one makes goes to feed these monsters There is always bridges and caves. It worked for the previous 10,000 years.