Thursday, Nov 05, 2009

Giving money to home buyers again in the US

Business Insider: The Homebuyer Tax Credit Is Officially Extended And Expanded

This gift of $8,000 used to be for first time buyers only, now it's extended to everyone. The problem is that those that would have bought anyway get some free money too. Of the 1.4m claimants so far of $8,000 credit, only 400,000 bought because of the credit. Therefore each of these 400,000 homes cost the taxpayer $28,000 to get sold.
The UK would love to do this too I'm sure, but hopefull can't afford it.

Posted by ontheotherhand @ 11:29 AM (632 views)
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1. mark wadsworth said...

See mine and Inbreda's comments on Daily Express thread.

Lots of councils and housing associations are already doing these 25% interest free loans for FTBs and "key workers" etc (who'd have thought Mr Minit had so many employees!), so some sort of grant or tax-break or MIRAS or something is only a matter of time.

Thursday, November 5, 2009 11:39AM Report Comment

2. icarus said...

The $6,500 for existing owners is a means of reducing the mountain of foreclosures and the the number of those currently stuck in the foreclosure pipeline. No doubt the banks as well as the housebuilders are behind the measure.

The article doesn't mention the numbers of fraudulent claims, which are creating a lot of employment for the IRS and the Justice department. According to the WSJ a Treasury official told Congress that 19,000 applicants for FTB credit hadn't actually bought a property and a further 74,000 FTB claims weren't from first-time buyers. The credit has also been claimed by very young people, including a 4-year-old. For all I know it may have been a racehorse.

The tax credits are only a small part of the strategy to support the banks by boosting house prices. Remember the Fed's purchase of $900 bn in mortgage-backed-securities and $200 bn in Fannie and Freddie debt, added to $300 bn of long-term Treasury bonds. A Goldman Sachs report recently calculated that gov't support since Obama came into office had caused house prices to be 5% higher than they would have been and that the eventual withdrawal of support, added to the massive foreclosure pipeline (gov't measures have ensured that there's a lot in there that is yet to be spewed out) would see house prices fall by up to 10% in 2010.

Thursday, November 5, 2009 01:00PM Report Comment

3. mountain goat said...

Can't take any stimulus away now looks like Option ARM resets are about to hit


Thursday, November 5, 2009 01:11PM Report Comment

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