I can't take it ....I'm reading all the blogs about how great the $8000 tax credit is! That we are so excited they are probably going to extend it. Yikes....bad idea! I believe strongly that this credit has served it's purpose and it's time to let it expire.
Do you realize how much this program has cost us? I don't have any clients who have bought soley BECAUSE of the $8000. All of my first-time home buyers were buying anyway and this was just a bonus. In fact the Business Insidersays that only 350,000 of the 2 million new first time home buyers, were buyers who would not have bought without the credit. That puts the cost of this program at $43,000 per house. That's not cost effective for the country's deficit. Perhaps if they allowed new home buyers to monetize the credit....then we would see more buyers enter the market who couldn't otherwise.
This means that we don't need the credit.....free money is nice, and I hope that people are using the $8000 to spend on home improvements or large purchases, which does stimulate the economy. But I think it's bad for our market as a whole.
I believe that this credit actually brings investors into our market at an alarming rate. These are speculators, they are paying cash and gambling on the market going up. In one neighborhood near me....6 bank-owned homes were purchased by the same LLC and now are on the market at a 15% increase in price. Since there are no other homes to compare, they are getting their price. The market has not, in fact, gone up that much, but they can push prices up themselves.
The true entry level home buyer is being edged out of the homes they want. Many of these are FHA buyers who won't even be considered due to the cash investors. What I see is a new bubble building....the investors are the flippers of old....and the flurry of activity is liable to lead to a new collapse...our prices are rising faster than the market should...and since they don't need to worry about appraisals....they can do it. Scary! I believe that this is fueled by the belief that prices will continue to rise due to the tax credit. These investors are playing in the entry-level, first time buyer range.
I believe my first time buyers are being edged out of the market by these investors and are going to end up paying more due to the artificial increase in price. The $8000 is not worth increase in price and lowers their chances to even get a home.
The market can handle this on it's own now.....time to get rid of the crutch!