Do we extend a bad thing – or do we do the right thing?
by Tom on September 23, 2009
in Market Musings, Realtor Thoughts
I was at an open house yesterday afternoon for a new real estate office (established Realtor, new location) and some of us were talking about the market and the topic of the $8,000 tax credit came up. I’m going to attempt to summarize some of what the reactions were:
- “It’s really helped my business over the last few months.”
- “I have no idea how all of the last minute deals are going to get closed before November 30.”
- “While it would hurt us short term for the tax credit to expire in November, I think it would hurt us MORE long term if we do extend it.”
- “It’s like a short term cocaine high.”
I have to admit, I was pleasantly surprised that as many of them were either realistic about the tax credit or actually opposed to extending it. I personally am opposed to extending it. We are spending $43,000 for every real estate sale that is generated by it and we need to realize that not only can’t we afford to spend the money, it’s not wise. We’d reinflate a bubble that will pop again and cause more problems.
The article below spells out a good “overview” of some of the economists and such who think there are a lot of potential problems with extending the tax credit.
Tom Vanderwell
Help may bring another bubble – Las Vegas Sun
Help may bring another bubble
Economists say extending tax credit for first-time homebuyers is bad policy.By J. Patrick Coolican (contact)
Tuesday, Sept. 22, 2009 | 2 a.m.
No doubt, a big tax break for first-time homebuyers is good politics.The $8,000 tax credit, enacted this year when Congress passed the $800 billion stimulus program, helps families looking to buy a house for the first time, as well as real estate agents and developers, who are ailing in the face of the worst housing market since the Depression.
“It’s like a short term cocaine high.” just about sums it up! Short term gains with long terms pains.