Gillespie and Schiller on "Roadmap to Rebound" CNBC - Friday 4:30 EDT

$15K is a rounding error on most manhattan apartments

Manhattanfox - not sure if it was clear that the $15K is a federal income tax credit, not a discount on the purchase price. It is intended to give a further incentive for buyers to come back into the market, and obviously, it is much more attractive to buyers at the lower end of the scale. The theory is that the recovery can be jump started by encouraging activity at the low end, and that when owners of studios and 1BR's are able to sell their properties, that they will hopefully turn around and buy something larger, thus allowing the benefits to "trickle up" the chain.

In the stimulus package signed into law 3 weeks ago, there is an $8000 tax credit, but only for first time buyers. That acts as a disincentive for the sellers to reinvest in the housing market, so this proposal would address that by allowing *any* buyer to take advantage AND increasing the credit to $15K.

Onward and Upward,
~ Philip

FULL DISCLOSURE - I am the Chief Technologist at Coldwell Banker and President of Manhattan Association of Realtors. As a leader in the industry and a member of society, I have a vested interest in seeing the housing market and general economy turn around and start rising.

ok -- $15K of wealth is a rounding error. I view them as the same as i plan to reenter the market using a check (no mortgage).

Manhattanfox - You're right in that it is targeted at the lower end of the income scale. Once you get above $250K, the tax credit definitely starts to lose appeal.

Not sure if you were implying that because you were paying all cash, that this would not apply to you. So just to be explicit, this proposal is *not* an additional deduction on mortgage interest. This *is* a straight credit that reduces your tax liability by $15K, regardless of whether you have a mortgage or not. If you owe $0 in taxes, then you would get a $15K rebate.

As you said, $15K in wealth is a rounding error for you, as it is for the middle to upper tiers of the Manhattan market. However, this $15K, combined with the sub 5% mortgage rates would certainly make a material difference for the entry level of the Manhattan market. And if that starts the market moving, perhaps it will trickle up to the price points you are considering.

Onward and Upward,
~ Philip

FULL DISCLOSURE - I am the Chief Technologist at Coldwell Banker and President of Manhattan Association of Realtors. As a leader in the industry and a member of society, I have a vested interest in seeing the housing market and general economy turn around and start rising.

Maybe we should stop bribing people to buy real estate.

pkiracofe,
To be fair, everyone wants things to improve. Listening to the experts is always a start. The realities of Manhattan RE are not too difficult to comprehend. Several years of runaway RE prices will have to correct in order to get this show on the road. The Fed has made it's move. To stop the RE deflation they will simply keep printing money untill sabilization occurs (keep your eye on gold). In essence, they are going to make the dollar in your pocket sooooo small that the house price bottoms. Now, who shows up to by the RE? Those thousands of buyers with substantial down payments and amazing credit? The rich euro trash? The answer....nobody. OK, not nobody but, almost nobody. People in the RE profession should be praying for a complete implosion of the market...I'm talking UWS calssic 7 going for $700,000.
Sounds crazy you say?
What do you think It's going to take to reverse the trend?
Answer: Painful deep bottom.
That's when people in your industry will start eating again.
Thanks for the disclosure.

someone, anyone please provide an overview on this show. I will be @ Sea drinking Lychee Martini's, eating Sean Wings, Tim Tum Fritters and their delicious Chicken Rice with Cucumbers.

Let's further subsidize the asset that created the bubble that sank the economy. Such genius only a realtor or a politician could have thought that up.

What the poweres that be are trying to do is falsely* restore faith in USA consumers AGAIN. Laws of nature will always prevail. bjw2103, Am I correct?

mbz:
"Let's further subsidize the asset that created the bubble that sank the economy. Such genius only a realtor or a politician could have thought that up."

I continue to be flabbergasted by these types of solutions myself. Given this type of problem solving, the feds should have just continued to float Madoff more money to inflate the already inflated....

@w81 Lol!

Mutombonyc - CNBC will have a webcast version available after the broadcast, if you are actually interested. As for restoring faith, who knows at this point what the best approach is in the long term. Presumably, action is better than inaction, and once you have committed to take action, then half measures clearly don't make much sense.

Onward and Upward,
~ Philip

FULL DISCLOSURE - I am the Chief Technologist at Coldwell Banker and President of Manhattan Association of Realtors. As a leader in the industry and a member of society, I have a vested interest in seeing the housing market and general economy turn around and start rising.

"The theory is that the recovery can be jump started by encouraging activity at the low end, and that when owners of studios and 1BR's are able to sell their properties, that they will hopefully turn around and buy something larger, thus allowing the benefits to "trickle up" the chain.

In the stimulus package signed into law 3 weeks ago, there is an $8000 tax credit, but only for first time buyers."

Just a note, that first time buyer stuff refers to people who have not owned a primary residence in the last three years, so it includes a lot more people than you would think. But yes, the $8k does nothing for owners who want to sell and move up, of which there are many, I being one of them.

Still, $8k is not much in the Manhattan market, we all know that. Plus, with the income limits, most buyers will lose a large percentage of the credit.

Perhaps the market can be moved by getting people to start buying into the lower priced properties and pushing people up the scale.

falco,
Your painful deep bottom will just freeze the market further. Sellers will not leave if they're going to take a bath. They'll just stay put.

Maybe sellers should simply cut their prices by $15K. Maybe brokers should focus on persuading sellers, banks and bondholders to accept the realities of a changed market, instead of lobbying for endless intervention to prop up prices.

Most responsible economists agree that the U.S. already subsidizes home ownership far too much. I understand that we can't pull the plug on all the subsidies in the middle of a crash, but adding more subsidies is just a taxpayer handout to sellers and mortgagees. There are better, more stimulative uses of that money.

Ultimately we have to let prices find their natural level. You know, like in a real market.