Homebuyer credit to hit rough road

[bobbyw24]

Homebuyer credit to hit rough road
By: Victoria McGrane
September 30, 2009 05:19 AM EST

With the housing market still fragile, lawmakers and lobbyists alike are pushing Congress to extend two temporary measures aimed at boosting sales.

One of these, continuing higher limits for so-called conforming loans in high-cost areas, appears to be on a glide path for approval by the end of the year.

But the other, an $8,000 tax credit to first-time homebuyers, set to expire Dec. 1, will be a much tougher pitch to make on Capitol Hill. It’s already cost taxpayers $15 billion, and adding to that price tag will not be popular at a time when Americans are increasingly worried about growing deficits.

Still, the idea of an extension has support from top lawmakers, including Senate Majority Leader Harry Reid (D-Nev.), who recently endorsed a bipartisan bill to extend the existing tax credit for six months.

Reid called the bill — sponsored by Sens. Ben Cardin (D-Md.), John Ensign (R-Nev.) and others — an “important tool to help stabilize the housing market.” Nevada suffered the worst of the housing bust and is expected to take much longer to recover than the rest of the country. . . . . .

http://www.politico.com/news/stories/0909/27713.html

 

[virgil47]

The $8,000 home buyer credit is inflationary. All it accomplishes is raising the sales price of homes for first time buyers by $8,000. When it expires the average price of homes will drop by the same $8,000. This will immediately put the vast majority of first time buyers underwater on their home loans. Hmmm, seems as though this "one time good deal" is going to cause more of the problem home owners already face. Has anyone noticed that the listing price for homes is not what the sellers hope to get from the sale of their house. It is now just the starting point for the auction the auction that follows. Many homes are now being listed at what appears to be a reasonable price and then after the auction they are selling for almost what they sold for before the economic downturn. This of course simply promotes the continued foreclosure on real estate. The bankers have figured a way to make money in the real estate business by selling houses at auction and then foreclosing and starting the cycle over. Nice if you can manage to keep it going.