Agreed. It is all about percentages.
Just short treasury bonds, when the US Gov’t gets downgraded hopefully you will make enough to offset the massive increase in taxes…
My understanding is that there is currently a $7,500 tax credit that serves as an interest free loan for anyone buying a house. I’m not sure, but I think this is for first time homebuyers only.
Congress is currently trying to pass a bill that will increase it to $15,000, open it to anyone buying a house (one time purchase only) and that it will not have to be paid back.
Ok Color me confused.
You’re saying there’s currently something in place that acts as an “interest free” loan…which would indicate you have to pay it back. But this handy dandy new line item you don’t have to pay back. So in essence the government is putting a 15K down payment on any house that anyone buys?..WTF is wrong with these idiots?
~Matt
It’s just pathetic how the America that once used to be the land of opportunity and freedom more and more drifts away from all that. We used to be the most prosperous nation but one has to ask themselves why that was the case. I doubt it had much to do with socialism, over-regulation, etc.
The peak of American prosperity was when we had strong labor unions and relatively little income disparity… and very high and progressive tax rates. Much as I hate unions, they are actually better than nothing. Also consider that the countries that have surpassed the US in living standard are more socialist than we are.
“Trickle down”, lower tax rates for the wealthy, and 3rd world imports have basically screwed most of us economically.
I have my home paid for and this stuff makes me sick…good for you to be able to capitalize. I just cannot fathom selling my home for a 15k credit
Just thought of something. Find a friend and each of you “buy” the other’s house and collect $15k… then trade back.
This whole thing is stupid as hell…
EDIT: And another tactic occured to me. All the people who are upside down with zero down loans… can they just default and buy the house down the street for less money and get $15k as well? Great idea to encourage that…
No. It can’t be used as a down payment. You get it back when you file your taxes. You have to come up with a minimum of 5% down for the house. Any loans that have some sort of government assistance will not qualify.
The idea is to stimulate people into going out and buying houses again, however, they don’t want irresponsible people to buy houses they can’t afford…much to teh anoyance of those very people if you read through the comments on the web.
Good idea? Bad idea? I’m going to buy a house and collect my $15K. I’m stimulated. ; ^ )
Just thought of something. Find a friend and each of you “buy” the other’s house and collect $15k… then trade back.
You’d have to trade back no sooner than 2 years later. I guess this could work, assuming you don’t use realtors. I would imagine this kind of fraud would be on the low end.
No. It can’t be used as a down payment.
I wasn’t suggesting it was a direct down payment, just that it might as well be.
The idea is to stimulate people into going out and buying houses again, however, they don’t want irresponsible people to buy houses they can’t afford…much to teh anoyance of those very people if you read through the comments on the web.
I don’t see how this will not stimulate people that can’t afford it. Right off the top you’re going to see a WHOLE bunch of people buying in December and probably spending AT LEAST 15K more than they can afford 
Unless they seriously alter the lending practices anyone could go out and borrow 5% on a credit card the day of closing, pay the 5%, then get 15K back on January 31st or so. They’d end up paying minimum for one month and that’s it.
Good idea? Bad idea? I’m going to buy a house and collect my $15K. I’m stimulated. ; ^ )
BAD idea, very BAD idea. Not a bad idea for you, hell a person than can afford it would be stupid not to buy in this market and with that deal. 15K on a 150K house that used to cost 230 K is a 41% price reduction over a year ago. However it’s a bad idea in the sense that now a new crop of people are will be dependent on government intervention in order to “Buy a house”. Previously it was lowered standards and low interest rates, now it’s “Tax breaks”.
I still can’t help but believe that the lending standards will be lowered yet again because “Well we have to get these tax credits out. The government wants us to.” Which is part of the reason standards dropped in the first place.
~Matt
Matt, I agree with much of what you’ve written. But take a guy like me, pretty stable job, in a smaller house than I can afford. If ever there was a time to trade up, now might be the time. Low interest rates, combined with something like this makes it a pretty good time to buy a bigger house. Not that I will…but it does make me start thinking about it.
I’m with Barry (hey, I actually wrote that!) on this one –
My wife and I are looking to upsize houses this year - moving into larger house, nicer hood, etc…and yes, living like responsible adults – we can afford the higher payments, insurance, etc…So…if we can get a free $15K from the feds - simply getting our no interest loan to the feds (withholding) back – why wouldnt I support this!?
If I can get some free $$ for something I was planning to do already - sounds good to me.
-Ron
As I stated, and maybe I should make myself more clear, there is a difference between taking the money and being the ones giving it away
Anyone who finds themselves in a position that buying a new house makes sense should do it. First time buyers or renters are looking at conditions they might not see for years. Those “Trading up” don’t get the same boost as they will end up selling their house lower than they would have a year ago however 15K is 15K.
One could “theoretically” make a “Lateral” purchase and walk away with some cash with the same or smaller payments. Of course that would all depend on closing cost, commissions etc.
But if a person was already looking to move or simply looking to buy the first time, now’s the time.
However it’s STUPID, BAD, BAD idea for the government to be doing it in the first place. I kind of look at like the “Stimulus” checks. No I didn’t send my back, but it was a stupid idea for them to send them out.
~Matt
Ron,
IF this gets passed, and IF you buy a house and qualify for the $15k tax credit, the week after you close on the new house you and your wife should fill out new W4s at work and claim a whole bunch of exemptions. Might was well more take home pay now and a little smaller refund in 2010. Couple of big IFs there though…
The same would be true for Barry and his wife…
Mike, give me a break. You are like my wife talking about her tampons right before we have sex. I’m trying to be stimulated!
Every comparison is always relative. I’m not so sure that many countries have surpassed us in terms of living standard - yet. And I don’t think it’s their socialistic nature that allows “them” to surpass us. It will be us changing much to the negative that causes for this relative change, us being forced to live within our means that will really change the American way.
Was it really the strong labor unions and high and progressive tax rates that allowed the peak of American prosperity or was that just a coincidence and did that happen around the same time frame? There’s always a time delay from cause to effect. America was once a country of great quality production and of much productivity. We’ve made a complete 180 since we became a debtor and service nation.
Lower tax rates for the wealthy has nothing to do with screwing the middle class. I think most people don’t have a clue how much taxes “the wealthy” pay. Seriously. It’s all relative and a “wealthy” individual paying close to 45% in taxes is often not as wealthy as many people believe. It’s all relative but if that “wealthy” person lives within his/her mean while the majority of lower income “middle class” is living way above their means…well, there isn’t really much of a difference in the standard of living there. Especially if that “wealthy” person is financially conservative yet has to compete with overextended individuals for the same Real Estate. The biggest difference is that one category of individuals is enjoying the life style while living within their means while the others are enjoying (close to) the same lifestyle while being heavily leveraged and in debt. And now you have the latter category receiving subsidies by the government in all forms from tax breaks, welfare checks, and RE tax credits while the first group will not only not receive those benefits (they pay for) but on top of that will foot the bill through even greater taxation. That’s why America will drift away from its greatness because the current system penalizes you for productivity and hard/smart work. But if history is an indication and very often it is, there is a limit to the duration an Empire can inflate to live beyond its means and when that day comes (and I think you agree with that given your suggestion to short Treasuries in another thread) the system will collapse. That outcome is currently as unrealistic to the public and most of the puppets in government as the collapse of the RE market just a few years ago. About as unrealistic as the collapse of the stock market in the late 20s, about as unrealistic as the end of the tulip mania, etc.
And competition for the same products by those than 1) can afford it and 2) those that compete for the same goods through credit and living above their menas, happens on all levels and throughout all categories of economic goods. Look at the tri market for example and who rides what kind of bikes for example. Sure, part of everything is priorities and just because somebody rides a $5000bike doesn’t mean they are overextended. But I would really like to know how many $5000 bikes aren’t on credit cards…and that’s one reason I was bearish on tri companies since 2006. Too bad so little are public, I would have loved to short many of them. That doesn’t mean I’m anti-triathlon. In fact, I would have bought a new tri bike with those profits 
I disagree that it was the “lower tax” rates that screwed most of us. Inflation screwed us. The Federal Reserve screwed us. Government and its massive overspending screwed us. Were it not for the “wealthy” that pay much more in taxes than the average person; and still pay an equal amount for every dollar within each tax bracket like everybody else, many socialistic programs could not be funded.
I struggle with the “idea” of this being free. If I am selling a house, I just jacked up the price $15k minimum. Bye bye “free” 15k. Back to square one.
And here the government would accomplish their motive for a short while - price fixing.
And putting the lower and middle class (<150k) back in the hole they were in. Another ponzi scheme… This will just be wasted money…what else is new, the gov’t is the home of the $1000 toilet seat. Why do people look to them to be “innovative”?
Why does the gov’t think that real estate values HAVE to be propped up? Maybe they are fair value now???
"Maybe they are fair value now??? "
Or maybe they will reach fair value after CA and other bubble markets will correct another 20-40% by 2014?
Maybe…but we may never know since markets are manipulated. All gov’t is just a ponzi scheme. Why force people to buy something at more than a market clearing price? I will never get it.
differences between the House and Senate versions … this comes from the WSJ.com
http://online.wsj.com/...414270675561877.html
A look at the differences between the House and the Senate tax credit provisions for home buyers.
House
Size of the Credit10% up to $7,500
Who QualifiesFirst-time home buyers
How It WorksThe tax credit is refundable, which means that even buyers who don’t owe any federal income tax will receive a check. Modifies an existing tax credit to eliminate repayment provisions.
RestrictionsLimited to singles who make $75,000 or less, and married couples who make $150,000 or less
Price Tag$3 billion
**Senate **10% up to $15,000
Who QualifiesAll buyers
How It Works.The tax credit is nonrefundable, which means that buyers can only claim the credit if they owe income taxes. Buyers can claim the credit on two years of tax returns.
Restrictions.No income limits; primary residences only.
Price Tag$3 billion$39 billion
(edited to fix the table)
Sure, all markets are manipulated, free markets almost do not exist. But the government manipulates the lower end housing market while the upper end has still to fall by a very significant amount. Guess what will happen by with jumbo loan pricing (non-Fannie/Freddie backed loans) by the end of 2009…meanwhile foreclosure activity in that RE market is growing rapidly. But don’t count on govt. manipulation in that segment, there are no handouts for “the rich”…it will get really interesting…