I was on the OPB‘s Think Out Loud program discussing The First Time Buyer Credit this morning. I come on the show 36 minutes in: Think Out Loud Home Buying (mp3).
I’d like to see the credit expanded to all primary residence purchases without increasing it from the current $8000 to see if that can stimulate the entire real estate market. I’d support lowering it to help pay for it to- $5000? I also think that a lot of people may find the three year requirement a challenge; things change. Ultimately lending requirements and perhaps more price softening is what it is going to take to stimulate the $500,000-$750,000 range in Portland.
I’d also like to see it used for investment back into the house, not for a European vacation, and don’t know how you control that. Could it be done by having the IRS give the credit and then the buyer providing an accounting of how it was spent on the following year’s returns with what wasn’t spent as taxes owed? Then how do you determine what was a valid expense? What about a move-in ready house or condo? Spending $8000 might be frivolous…
The changes (not saying they are bad) in lending have taken away the ability to draw on the equity in the home which means that many buyers have lost the ability to put money into their houses after closing making the move-in ready house more appealing and taking away some of the ability to build sweat equity.
Of course, as has been pointed out, asking a Realtor if the Credit should be extended is a bit like asking the fox if the door to the hen house should be removed. The smart fox though needs to keep the future in mind while contemplating the present. The Credit has helped but I don’t think the wheels are going to come off if it expires and I do think it can be improved.
Currently listening to T.O.L. You state that the tax credit doesn’t solve the problem. What do you think the problem is?
That was a very interesting TOL. If only I could have called in then and now the site won’t even let me register to comment online:O(
I would like to ask how housing stability is defined and what would it take to get there. Per the WSJ there are 1.2 million ‘seriously delinquent’ mortgages and of those 200,000 are more than 12 months late and the banks have NOT started the foreclosure process. The very high incidence of foreclosures (and Portland area’s rates are increasing at an alarming rate) is part of the stability problem. Another huge factor for Portland area is the affordability factor, either incomes have to increase or housing prices have to come down more. And I see no reason for incomes to increase given our unemployment numbers.
Unemployment is one major factor in this and there is no doubt that Oregon’s is grim. There was some good news that Freightliner is not closing. There is a long discussion on Blue Oregon about the Forbes report at put Oregon as the #10 place for business. Six months of inventory is often pointed to as an indicator of a neutral market. Has that changed with the times? Stability won’t occur until all segments of the market are moving.
But apparently, it’s not just Californians moving to Portland; UFO’s were spotted last week over the University of Portland…
UFO’s LOL, thanks for the laugh.
I think we need to look beyond unemployment and ask why did this bubble occur and have we done something to prevent it from happening again…This American Life’s “Giant Pool of Money” is quite informative.
So what’s gonna prevent the next bubble which eventually leads to high unemployment? What creates a stable economy?
No response expected as this has been debated to no end elsewhere. I think the take home point is that it’s not a simple solution. It’s not just a matter of people getting into too much of a mortgage. It’s not just loose lending standards.
If you want this to simply be related to unemployment we better hope those jobs we create are $80K+/year so they can afford our over inflated values;O)