The $8000 new buyer tax credit.

The 8000 tax credit provided incremental boost of sales at the low end, by stealing it from future sales. Assuming it is not extended, we will have a dip, since we accelerated some sales from 2010 to occurring in 2009. The true incremental sales that occurred as a result of the tax credit are estimated to be quite modest, as a purchase either makes sense or it doesn't and the extra $8,000 in all liklihood can't really tip the scales much. At best it accelerated sales that were already being contemplated..

what are you basing this on...extensive contemplation of youtube?

surely a sharp decline in sales is expected after the initial deadline passes,

it terms of the market, the deadline has already passed. I believe you have to close by Nov 30 so you should already be in contract by now. Don't know that even an all cash buyer (unlikely for a first time buyer) could make a close by Nov 30 at this point.

I think there's a good chance it will come back. The NAR has been hitting Capital Hill particularly hard on this issue, peppering their economic reports with concerns for the economy should the credit not be renewed.

Lemming honey. It sure iz sweet!!!!!

yup, we the actual tax-payers, just gave a new lot of sub-primers the $8000 they need for a deposit, and with mortagage interest tax credit, they wont be paying any taxes for decades, assuming they actually manage to keep their homes this time round.

Slight of hand program like this are a crimminal was of money, but our estimeed political leaders of both parties.

I'm sure glad we don't have a managed economy.

River, I don't believe that the $8000 only effect the low end of the market. That's almost like saying raising the minimum wage only effect the people currently earning minimum wage. Also, I won't assume people with millions in the bank don't care much about $8000 for the same reason I won't assume they are big tippers. While they hit the income cap for the tax credit, their children probably don't.

I agree that it's stealing from future sales, that's why I'm not sure if the tax credit will have a positive year-over-year price impact even if sales increases. When people do their buy/rent analysis next year, they will be looking at housing price forecasts that will include the impact of the tax credit.

Has the tax credit really been that helpful? First of all, $500 million of it went to fraud (minors, illegal aliens, people who never bought a house, etc.). Accoridng to the Treasury Dept.'s insepctor general, 53 IRS agents wrongfully obtained the tax credit.

And second, most importantly, if you can afford to buy in prime Manhattan, than chances are you do not qualify for the credit. I saw Dolly Lenz on Fox News the other day and she said her buyers took advantage of the credit. Seriously? I thought she was a high end broker to the gazillioniares. Since when does she work with buyers with incomes low enough to qualify for the credit???

so...if the minimum wage goes up, people making $100K a year and up see a difference?

"When people do their buy/rent analysis next year, they will be looking at housing price forecasts that will include the impact of the tax credit."

Do you really think the average homebuyer sits down and does all that math? America is a stupid country. Look at our failing schools...

River, I don't believe that the $8000 only effect the low end of the market

Sunday, My reasoning is this 8,000/ $200,000 is relatively large compared to $8,000/$1,000,000. It is also a "first time" home buyer credit, and the seven figure places are not typically first time buyer.

CC, yes, people making $100K a year and up will be impacted, but obviously less so. Groceries, dining out, vacations, etc. will all cost more for any increase in minimum wage. Let's say the minimum wage is $10/hr. If the minimum were to be raised to $11/hr, then current employees making $10.50/hr will want at least $11.50/hr... and so on. Increase in labor cost will translate to higher prices for the end product/services.

Pres & River, I was trying not to spell it out, but many rich people are cheap. $8000 will effect their decision. While their income is too high, their kids' income are probably not.

Don't forget that anyone who thinks about buying really want to buy. The question is whether they should buy now. People want to feel good about buying and will use any excuse they can come up with to help justify their decision to come off the fence.

When number of sales are low, even a small number of sales influenced by the tax credit will make a difference.

" I saw Dolly Lenz on Fox News the other day and she said her buyers took advantage of the credit. Seriously? I thought she was a high end broker to the gazillioniares. Since when does she work with buyers with incomes low enough to qualify for the credit???"

As I have posted on SE before, when I was furiously looking to buy this summer for a 2+ bed, every time I went to a new development, I ran into people buying for their young adult children to take advantage of this tax credit. If your young kid right out of college is working, they buy an apt, the parents hold the mortgage, the kid gets the tax deduction, the parents get a pied a terre. everyone is happy and the government underwrites a new luxury for the gazillionaire.

"As I have posted on SE before, when I was furiously looking to buy this summer for a 2+ bed, every time I went to a new development, I ran into people buying for their young adult children to take advantage of this tax credit. If your young kid right out of college is working, they buy an apt, the parents hold the mortgage, the kid gets the tax deduction, the parents get a pied a terre."

not a hater, but would like to see these boomers lose some $ so that they stop bidding prices up and they begin doing the opposite. when is it gonna happen?

i mean, the boomers downsizing and in distress dominating the effect of those buying for themselves and for their kids? at some point is gonna be obviously a negative force, but how long from that point are we?

"The Center for Economic and Policy Research in Washington, which released the report last month, estimated that 30 percent of homeowners aged 45 to 54 were in this predicament, known as being “under water.” (About 15 percent of older baby boomers, 55 to 64, fell into that category as well.)"

http://www.nytimes.com/2009/03/15/realestate/15Mort.html

it would be more "useful" for prices to go down if those severely under water were the old baby boomers. the younger group has better chances of holding on while under water as they are not so close to retirement. the older ones tend to be the ones buying for their kids? i wonder...

"The center’s report also found that baby boomers in the 45-to-54 group saw their overall net worth plummet by about 45 percent over the last five years, to a median level of $94,200 from $172,400. "

wow, looks like they are just starting saving. they have 15 years to go, but at least 45% will depend on SS and Medicare. men, ... this is the rat race gone bad.

Well, there's this rule in real estate, that prices never go straight up.. except we thought this just once..

"As I have posted on SE before, when I was furiously looking to buy this summer for a 2+ bed, every time I went to a new development, I ran into people buying for their young adult children to take advantage of this tax credit."

And I'm sure most of them would have bought regardless of whether the credit existed or not.

Pres: I'm sure many would have bought regardless of the credit. And it is legal for them to take advantage of the credit. But I was looking at 2 bedrooms at 200 WEA, 10 WEA, etc. I just don't think that the credit was designed for people who could afford 2 mm apts. And, it might have prompted a few to think that if junior could get 8,000 to pay off student loans, it might just be time to get that pied a terre they always wanted. I think it probably contributed slightly to the summer bump as opposed to a zero effect which most believe of the tax credit in Manhattan. That said, this is only anecdotal and I probably only saw this phenom 6 or 7 times (which is proportionally, a lot). I also don't know if they actually purchased though two were discussing timing of closing in the presence of other lookers ( and one of those apts went into contract). For all I know, they were shill actors paid for by the developers.

I hope they don't extend the credit because I think it is healthier for the market to find it's own level.

I heard the credit might be increased to $15,000 with no income restrictions.

Increasing it to $15K with no income restrictions sounds like a terrible idea.

That being said, my wife and I should officially be in contract Tuesday or Wednesday, and are hoping to close in time to take advantage of the credit. Hopefully they'll even extend it a couple of weeks for all of those people who are not going to be able to close in time...since choosing the monday after Thanksgiving is pretty much the worse day of the year that someone could possible pick.

if you think increasing it to $15k is a horrible idea, then wait to close until after its extended and send me the check. Why are you in such a rush to take advantage of the credit that you hate????

I don't hate the credit, in fact we stand to benefit greatly from it.

I just think that increasing it to 8K and getting rid of the income restrictions is a poor idea. 15K is too much that it will artificially inflate prices even more than they already are. Also there will be an even larger incentive for fraud which is already rampant in the program. If they were to increase it to 15K, we would try to stall the closing to qualify, but I don't know if that would be possible.

Honestly though, we probably would have bought anyways without the credit. Although if the credit was not available, maybe the market would have dropped an additional 10 or 15K, who knows?

i was going to buy, the tax credit only pushed the decision to sooner rather then later. i think right know it is still up in the air if it is going to be extended. i imagine it will at least go to the end of the year. they even extended that cash for clunker program.

if you make over $75k you are not elligible for the credit.

For a married couple it extends to $150K income if you're both buying for the first time.

get married now or be priced out forever?

http://www.bloomberg.com/apps/news?pid=20601087&sid=a5QROYtebjYc

Reuters says Senate Democrats have reached agreement on extending the tax credit and that Sen. Chris Dodd wouldn't provide details. Republican have to climb aboard if the measure is to become law.

I'm sure the Republicans will agree to support it. To entice them, the Dems may need to put something extra into it. Maybe there can be a clause to allow realtors to carry guns or somethign like that. Republicans like their guns.

Of course the republicans will support it. It's good politics.

Not a good sign for national RE market if it still needs the help...

Of course this money goes to the seller, not the buyer. I don't hear many people picking up on this not so sublte fact.

Am I missing something here? Why would anyone decide to buy a home because of $8000? Shouldn't someone calculate out what the projected interested would be in conjunction with average decline of the market?

Could anyone please provide more details on two of the points that were discussed above - $75K salary cap (glamma) and money going to the seller (Riversider)? I think I know some misguided souls are are in fact buying [sooner] because of this.

get married now or be priced out forever?

no you just wind up with sloppy seconds

Seems there is some smaller benefit for earners between $75K and $95K:
Are there any income limits for claiming the tax credit?
Yes. The income limit for single taxpayers is $75,000; the limit is $150,000 for married taxpayers filing a joint return. The tax credit amount is reduced for buyers with a modified adjusted gross income (MAGI) of more than $75,000 for single taxpayers and $150,000 for married taxpayers filing a joint return. The phaseout range for the tax credit program is equal to $20,000. That is, the tax credit amount is reduced to zero for taxpayers with MAGI of more than $95,000 (single) or $170,000 (married) and is reduced proportionally for taxpayers with MAGIs between these amounts.

lo888 - I think Riversider just means that if the buyer has the $8K credit, then the seller is just going to price the place appropriately and will end up selling it for $8K more, thus pocketing the credit. I disagree with this however. One reason is that I disagree is that you don't have the $8K to use at the closing, you'll only get it after the fact.