First-time homebuyers leading market back

[Swede]

In fact, 47% of all Americans who purchased homes this year had not owned one during the previous three years, according to a press release Friday from the National Association of Realtors (NAR). That was up from 41% of sales in 2008 and 36% in 2006.

The tax credit boosted markets by giving first-time buyers a credit of up to $8,000 they could deduct from their income taxes. The credit is fully refundable: Even a buyer who pays less than $8,000 in income tax gets the full amount of the credit back.

http://money.cnn.com/2009/11/13/real_estate/first-timers_leading_housing/

[MercutioATC]

1. Yep, the housing market "recovery" is completely based on a short-term government giveaway.

[slackmaster]

2. Not completely - I personally know two middle-aged people who just bought their first homes before..

...the incentive was available. Both of them at foreclosure auctions.

[MercutioATC]

3. Absolutely correct. The market is so bad that 42% of existing home sales are previous foreclosures

...and there are deals to be had.

[slackmaster]

11. I see that as both good and bad

Bad for people who lost their homes, good for people who can afford to buy now.

[jpak]

4. It's called stimulus and it's working

too bad

[MercutioATC]

5. M'kay

Pay people thousands of dollars to buy a product (houses or cars) and they'll probably buy them...but it's a limited program. When it ends, we're back where we started. We haven't addressed any of the actual issues.

Remember, part of every dollar spent to finance this faux recovery is coming out of YOUR pocket.

[NNN0LHI]

6. And for every dollar spent on programs like these that is one less dollar for wars ...

... and tax cuts for the wealthy next time the Republicans are in charge.

You see a problem with that?

I don't.

Don

[jpak]

8. Ouch!

:rofl:

[MercutioATC]

10. Are you insane?

Regardless of what we spend on anything, we always put wars on the credit card. Hell, we're putting "stimulus" and two wars on the credit card right now (under a Democratic President).

...and we know from experience that cutting taxes for the wealthy is always on the table as long as a supply-side (Republican) government is in charge.

[shraby]

19. I must inform you, that in Obama's first budget, he put the

wars into the budget for the first time since 2001. One reason the deficits ballooned.

[jpak]

7. M'kay

RNC talking points

The alternative is a depression in the housing market that won't not be reversed for a very long time.

Getting our ecnomy back on track is worth every penny from my pocket.

Obama is doing the right thing - and it's working.

Just sayin'

[Swede]

9. People are saying to Obama "do something" when he does,

they still piss and moan. This money does not disappear,it goes to the carpenter,plumber,tool supplier,etc. It is a ripple effect,that we hope gets the ball rolling.

[MercutioATC]

12. I think people expect Obama to do something intelligent when they say "Do something".

He hasn't done much of anything intelligent so far.

[jpak]

14. Palin 2012! You betcha!!11

There's an intelligent alternative for ya!

[MercutioATC]

15. If your only perceived options are Obama and Palin in 2012, you DO need help.

Jesus, the brain might not be a muscle, but it DOES work better if you stretch it occasionally.

[jpak]

18. LOL!!!!1111

:rofl:

What are your perceived options?

[NNN0LHI]

22. Obama, Palin and Nader

Just a guess.

Don

[jpak]

24. or Romney and Ron Paul

:D

[MercutioATC]

32. With the society we've got, I was thinking Oprah and whoever won American Idol that year.

[MercutioATC]

26. At this point? Throw as much money as you can into REAL stimulus.

It would be unpopular with the Repubs, but create a federal bank to make loans rather than loan hundreds of billions of dollars to corporations that might very well fail anyway...and only if it's needed.

We need 1.3 TRILLION dollars of infrastructure improvements in the next five years...spend most of the money on that.



...and begin all "stimulus" thoughts with this basic philosophy:

If you really want to stimulate an economy, you look for BOTH immediate spending and long-term gains. The best way to spend $100 in "stimulus" money is to walk into a low-income neighborhood and pass out ten dollar bills. These are the people who will spend the money locally and immediately.

If you REALLY want to stimulate an economy, you take those ten dollar bills and pay somebody to fill a pothole or fix a bridge.

[jpak]

31. Umm that is part of Obama's ecomomic recovery plan. But his addresses many aspects of our economy

not just rebuilding infrastructure

It's the right thing to do

and it's working

[MercutioATC]

33. Ok. I'm gonna take it slow for you.

Yes. That is absolutely what Obama endorsed...but he's shown no sign of doing it.


Just give me ONE piece of this Obama "recovery" plan that actually works.

[jpak]

37. GDP is now positive and growing - thanks to Obama

The rate of accelerating jobs losses has been reversed.

The financial markets have stabilized - the stock market is recovering. IRA portfolios have benefited.

The housing markets have stabilized and are recovering.

Millions of Americans that would have lost their unemployment benefits still get their checks. That money stablizes the economy in areas of higher than average unemployment.

The US auto industry greatly benefited from cash for clunkers.

In Maine, where the Democratic governor rapidly appropriated stimulus money - the state unemployment rate DECLINED in September.

Enough?

prolly not

[MercutioATC]

53. Dude, you're classic.

The rate of accelerating job losses is still 400k-...that's MINUS...and we really need numbers showing 125k+ to indicate actual employment stability.

The average P/E ratio for S&P500 companies five years ago was 19. Today, it's 140. Unless you can come up with a really good reason for this, we're headed for another crash.


I could go on, but I find myself unwilling to make the effort for somebody so willing to browse the latest news for random stories that make them feel happy.

[jpak]

57. Cherry pickin' DOOMer bullshit

US GDP 4th quarter 2008 NEGATIVE 6.2% (-6.2%)

US GDP 1st quarter 2009 NEGATIVE 6.1% (-6.1%)

US GDP 2nd quarter 2009 NEGATIVE 0.7% (-0.7%)

US GDP 3rd quarter 2009 POSITIVE 3.5% (+3.5%)

Viva Obama!

[Statistical]

59. P/E of 140. You just pulled that from your ass.

http://www.bullandbearwise.com/SPEarningsChart.asp

[MercutioATC]

65. Sorry, 139.

http://seekingalpha.com/article/161619-s-p-500-s-pe-ratio-of-139-isn-t-sustainable

[jpak]

13. Exactly - new home buyers buy stuff for their new house - big ticket stuff

like furniture and appliances

That is an economic stimuus multiplier.

Apparently the sad sacks can't appreciate any of this.

[MercutioATC]

17. Where are they getting the money to buy these things?

You seem to think that there is a huge pool of people with good incomes and big bank accounts who just won't spend money because they don't actually own a house,

...and that's bullshit.

[jpak]

20. if they get a refund on their home buyer tax credit, there's $$$$ for new stuff

see?

prolly not

:sigh:

[MercutioATC]

29. Yeah, but it's not real money.

We, as a society, are paying for it.

[jpak]

34. The Do-Nothing Approach = Great Depression

Boy - some people just don't get it.

Perhaps they want Obama to fail.

Ya think?

[MercutioATC]

41. The Idiot Approach.= what we have now.

You're a textbook case.


I never advocated doing nothing, I advocated intelligent spending. Spend money intelligently and you might get an actual sustainable stimulus.

What we have now is clearly not sustainable.

[jpak]

50. The "Idiot Approach" is working. The first order of business was to stop the bleeding

That's been accomplished.

The next order of business is to heal the patient and make sure he/she does not attempt to jump off cliffs again.

Which is exactly what Obama is doing.

Viva Obama!

Viva!

(how's that for cheer leading)

:evilgrin:

[girl gone mad]

60. Most economists oppose the housing credit.

It's an extremely inefficient stimulus, costing $43,000 per additional buyer.

http://www.calculatedriskblog.com/2009/09/streitfeld-housing-tax-credit-debate.html

It's also ineffective on the whole, pushing up the vacancy rate, putting pressure on rents which leads to more commercial defaults and deflation. The credit temporarily increases demand, but at some point this demand will dry up and housing prices will again resume their slide to historical price to rent ratios. In addition to the large amounts of fraud related to the credit, many of the buyers using the credit are only marginally qualified to purchase. I would expect the default rate of this group to be significantly higher than average.

http://www.calculatedriskblog.com/2009/10/housing-tax-credit-nahb-projections-and.html

[SoCalDem]

62. Smart ones will wait until they have money to completely furnish the house

My son & his wife just bought a house.. It was built in 1978 and is across from one of the oldest golf courses/country clubs in the area. The house is not a McMansion, but will serve them well for many years. they plan to stay.. They could have found a cheaper and probably bigger place in a cookie-cutter neighborhood, but they chose this one, in an older well-established neighborhood..

This house sold for over $400K a few years back, but they were able to get it for $240K and put down $79K..did I mention that these "kids" are savers?

Their PITI will be about $300 less a month than what they paid for a crappy 2BR apartment.

They do not have a houseful of furniture & doodads, but they do have lots of wedding presents they got last year when they got married. ASl;l that stuff has been in storage..and of course we will be handing down some things for their house.. a TV for the family room and the rocking chair his grandma rocked him in, as a baby..and some bookcases & assorted stuff. her parents will be donating stuff too..

People who go out and charge a houseful of new stuff will often find themselves with too much debt, piled on top of too much debt,m and will not even be able to enjoy their new home..

There is NO shame in having some rooms, sit unfurnished for a while:)

[shraby]

16. Actually the programs have addressed the actual

issues..every car purchased with that money has put people back to work..the people who make the gadgets that go on cars, the ones who make the upholstery covering, the ones who assemble it. Then there are the ones who deliver the cars to the dealers, the dealers who sell them, the state governments that license the cars, the places that disable the old engines. Some of the bodies of the cars turned in are purchased by restoration shops..this is a whole other story.

[jpak]

21. stop making sense

it doesn't work on some people

[Robb]

28. You must be a realtor, jpak.

If you think housing is coming back, let's see you buy into the game.

No?

Well, surely someone other than those eligible for the tax credit are getting in on this, the ground floor... REITs, for example, must be buying big.

Wait, no one? No one else?

How about banks? If they thought housing had hit bottom and was going up, they'd be moving on foreclosures, right? So they could sell the homes and get them back on the market?

They're not. Foreclosures are taking a record average of 9 months. I have a family member who hasn't paid his mortgage since July. Not even a nasty phone call, much less a Notice of Default (first step in foreclosure, at least 90 days after that before auction in this state). Nothing.

The ONLY people who are buying into this market are the ones being lured by (relatively) low foreclosure prices and tax incentives.

No one else.

I'm a big fan of this administration's moves in general. This one is fluff and nothing more. The "money" ain't on this working for more than a few more months.

[MercutioATC]

36. No, jpak is a true believer.

He/she MAY be a Realtor, but his/her constant support of current legislation indicate (to me) somebody who just supports the ideal without considering all of the ramifications.

He/she is just a groupie.

[Robb]

38. Dude, *I'M* a groupie!

Seriously, I'm all over Obama like a dog on a ham. :D

But this one is a nightmare. I feel like we're luring first-time homebuyers into a freakin' trap.

That $8K isn't going to look as good when the house they bought loses $25K in value six months from now. :(

[MercutioATC]

45. So you're really NOT a "groupie" on this issue.

Robb, we're contemporaries.

Look at the real gain. There is none.

...and that's my point.

[Robb]

51. It's just pushing the problem out, IMO.

IF jobs can get going, this all might yet work. Without jobs, the housing market can never recover. Giveaways won't help it. This is a parlor trick here that MIGHT last long enough.

[MercutioATC]

54. I agree with that.

But we haven't actually stimulated (or created) any jobs.

[Robb]

56. Nope. But as jpak pointed out, GDP went up.

+3.5% for Q3.

Of course, 2.36% of that was consumer spending -- cash for clunkers made up a full percentage point of that. 1.22% of it was investement -- half of that was residential construction, but new home starts are still in the crapper:


Increases in gov't spending account for .48% ... And we can apparently shave off about .4% of the whole thing for an incorrect guess on the trade deficit.

And, we must remember: 08Q4: -6.3%, 09Q1: -6.1%, 09Q2: -1%. We have much ground to make up, and the rosiest picture calls for another 2% in 09Q4. :(

[jpak]

46. You are under the impression that banks are making loans to people that can't afford their new home

I do not think that's correct.

If anything, most banks have raised the bar to qualify for a first new home.

Just sayin'

[girl gone mad]

61. Actually, there is quite a bit of truth to that notion...

since the $8000 can be used as a downpayment on an FHA backed loan requiring as little as 2.5% What's more:

http://www.ritholtz.com/blog/2009/10/why-expanding-home-buyers-credit-is-a-mistake/">$15,000 Home Buyers Credit Costs $292,000/home

...All of the home mortgage modification programs and foreclosure abatements are attempts by politicos to “ease the pain.” These programs have proven themselves to be ineffective in preventing defaulting mortgages from going into foreclosure. More than 50% of all mods slip into foreclosure again, and in some instances, we see 70-80% delinquency rates.

But the real question is “Why are we trying?” Except for those instances where there has been fraud or predatory lending, we really should not intervene. The foreclosure process is restoring prices to where they should be.

Now comes the latest attempt by politicians to intervene in the housing market: Expanding the about to expire, $8,000, first time home buyers tax credit to a $15,000 credit for everyone. This is counter productive. (Won’t that just make prices more expensive?) The lobbyists want to goose the housing market by any means possible — even if it is an expensive and unhealthy method.

A recent Brookings Institute analysis (found via Barrons) demonstrates persuasively that the $8,000 subsidy actually costs $43,000 per extra house sold; worse yet, the new $15k tax credit will ultimately cost $292,000 per home.

How does that math work? :

“ refundable tax credit, which was part of the February stimulus bill, gives $8,000 to first-time homebuyers (but is phased out at higher incomes). It is scheduled to expire on December 1, 2009, although the sponsor of the initial proposal, Senator Johnny Isakson, now wants to extend the credit for another year, and expand it to $15,000. This extension would be a mistake.

Approximately 1.9 million buyers are expected to receive the credit, but more than 85 percent of these would have bought a home without the credit. This suggests a price tax of about $15 billion – which is twice what Congress intended – for approximately 350,000 additional home sales. At $43,000 per new home sale, this is a very expensive subsidy . . .

An extension and expansion of the tax credit will cost far more than the $15 billion of the current credit, likely in excess of an additional $30 billion. And the cost per new house sale will likely be much higher going forward, as a greater proportion of the sales will be for those who would have bought anyway, without the credit. (emphasis added)

In a latter posting, Gayer does the math on the new tax credit: A one-year, $15,000 tax credit apply to all home buyers, would cost the Treasury ~$73.9 billion. Gayer estimates that beyond the people who would have purchased homes anyway, the increase in house sales would be about 253,000. Each extra home sales costs the Treasury $292,000 ($73.9 billion divided by 253,000.)

Randall Forsyth points out a lower (but still absurd) figures calculated by the NAHB:

The National Association of Home Builders, not exactly a disinterested bunch, figures the subsidy would boost house sales considerably more, by 700,000 homes. That implies each of those additional sales would cost American taxpayers only $133,000 — still “a very expensive and poorly targeted subsidy,” writes Gayer.

Its one thing to argue as to whether the government should be so brazenly intervening into the housing market, and I can understand reasonable people disagreeing. But the subsidy — whether its $133,000 or $292,000 — is absurd.

[jpak]

40. what a stupid post

:rofl:

[Robb]

48. I am awed by your riposte. nt

[jpak]

43. No - just responding the Obama Must Fail BS

and your wrong

:D

[MercutioATC]

47. I don't believe that "Obama must fail"

I believe that Obama's current plan WILL fail.

[jpak]

52. Ummm...what was GDP before Obama's stimulus package and what is is now?

It was shrinking

Now it's growing

I rest my case

Hooray for me!

:evilgrin:

[rucky]

27. True for cars & clunkers, but for the real estate market...

what we've been seeing is alot of deals falling through because of contigent offers. I'm a homeowner, I want to downsize. I make an offer on a home, but have to sell mine first. Someone makes an offer on my home, but they have to sell theirs first. See how it gets clogged up really easily? So a first-time homebuyer comes in with a non-contingent offer, buys a home which triggers the seller's contingent offer, which triggers that sellers contingent offer.

[RB TexLa]

23. Sounds more like The Realtors Commissions Support Act at work to me.

[jpak]

25. Sounds like the American Recovery and Reinvestment Act of 2009 to me

and it sounds like it's working

[RB TexLa]

30. You have already said that, in fact it is the same thing to which I was replying

Are you some kind of trained talking/typing bird?

[Starry Messenger]

42. Hope you are getting well paid for this

[jpak]

44. You found me out! What a smartie you are!!1111

:rofl:

[Ikonoklast]

64. That's all they got. Accuse you of being a paid troll.

And it's coming from someone that wants this economy to completely fail, bring misery to untold millions, in order to sweep in her version of a 'New World Order'.

They aren't Democrats. They aren't even Progressives. They're NUTS.

They'll run back to their site and whine about DU.

[Greyhound]

35. Real estate industry weasel numbers.

There are two things this PR campaign is supposed to accomplish; one, prop up the artificially inflated house valuations (doomed to fail as the only thing that can do this is a significant increase in wages) and, create/continue the next illusion of prosperity long enough for the real money to get out while the getting is good.

It might work. It has in the past.

ETA: One more thing, there are between 7 and 10 million more home set to officially enter foreclosure over the coming months, so any reduction in static inventories will help with the next scam.

[Tierra_y_Libertad]

39. Oh joy! A new Housing Bubble!! Buy Now!! Get 'em while their hot!!

As I recall, that's exactly what got us into this endless recession and faux "recovery".

[tjwash]

49. Um no. what actually got us into this mess...

...was various unregulated private investment firms performing hard leveraging of sub-prime loans to high risk borrowers, bundled and hidden in to mortgage backed securities, and sold overseas various brokerage firms in China and Great Britain before the borrowers defaulted.

This is actually incentive to get people who have good credit scores to buy a house and start to get a reeling real-estate market back on it's feet again.

But; it wouldn't be DU on a Sunday if we didn't have the various concern trolls here spouting off misinformation alongside ultra-leftist windbags that want to see the current administration fail worse than the teabaggers do.

[Tierra_y_Libertad]

55. Or, red-baiting apologists for a failed trickle-down "recovery".

How long do you reckon a consumer based economy is to last when the consumers can't get jobs to pay for consumption?

But, there are those devoted to whistling a happy tune while heading to the grave yard.

[FarCenter]

58. The real gimmick is that the first-time homebuyer can use the $8000 as the down payment

So the "no money down" scam is back on.

[Warren DeMontague]

63. Don't even bother. The world is ending, everything is fucked, and don't try to tell 'em otherwise.

WUR DOOOOMED! DOOOOMED! DOOOOOOOOOOOOMED!