I know that I have been writing a good deal about the first time homebuyer tax credit as of late, and what can I say...it is on my mind. A big segment of our client population happens to be first time buyers, so I am obviously wanting to stay in the loop.
At the surface, this seems like a really good idea. Most realtors that I speak to seem to be really hoping for the extension/expansion, as I am. Anything that can stimulate this housing market is obviously something that I stand to gain from personally. Or do I?
First, let's start with the positives:
- Obviously, my first time buyers are inclined (in theory) to "get off the fence" and take advantage of some great deals out there.
- If the expansion is approved for existing homeowners, my business could really benefit. People that are already living in a housing stock that is appealing to a first-time buyer, would presumably have an easier time selling, and potentially trading up into a part of the market where there are outstanding values, while collecting a tax credit.
Now, some questions and reservations:
- What if, in the long term, this credit is just continuing to prevent the market from making a necessary correction? Home prices were rather inflated, and a lot of us certainly enjoyed the ride, but is this credit just going to prolong the inevitable and ultimately make the fall even harder?
- Why is it that the credit is the same regardless of the market? Why is there the same incentive in healthy markets as in those that are hardest hit? That doesn't seem to make sense, and the taxpayer is left paying the bill.
- Where on earth does the FIVE YEAR qualification come from for existing home-owners? What about those that have been in their homes for three years, and are under-water?
- As it looks to me, the credit is available to those buying a principle residence, but it doesn't REQUIRE that you sell your current home...there are some scary implications here.
You may be interested in the post that sparked all of this thought. A very bright writer named Jamie Smith-Hopkins that covers the real estate beat here in Baltimore wrote this post on her blog. It is interesting that most people seem to be in favor of the idea, but the comments on the blog post are particularly interesting.
In summary, I don't really know where I stand on the subject. In the short term, I probably stand to gain a lot of immediate business. I know that I go above and beyond to make sure that people are very qualified to purchase, as I am looking to not just make one sale to each client...I want to hear from them in six or seven years when they move. So, I guess I am not overly concerned that one of my clients would be "victimized" by the credit, I do however wonder what the implications are to the market as a whole, and to my tax bill. On the surface it seems like a great deal, but it appears to be rather poorly thought out in an effort to "do something quickly."
I'd be interested in your comments!
