Housing tax credit cost more than it benefited — for homeowners

posted at 3:35 pm on May 11, 2011 by Ed Morrissey

In my analyses of the homebuyer tax credits issued, renewed, and expanded by Democrats in response to the housing market collapse, I called it a waste of taxpayer money that only incentivized those already inclined and qualified to buy, skewed demand, and put off a much-needed correction in pricing.  I left out something that the Wall Street Journal’s Smart Money noticed in Monday’s Zillow report, which is that it turned out to be a pretty bad deal for those who used the credit as well as taxpayers.  Thanks to the artificially higher home prices that the tax credits provided, buyers have lost almost twice as much in value as the credit itself, and in some cases 150% more:

The government’s recent $8,000 cash incentive for first-time home buyers has proved even more costly for recipients than for taxpayers, according to data released Monday. Typical buyers have lost twice as much to price declines as they received from the program.

The median home value fell to about $170,000 in March from $185,000 a year earlier, according to Zillow.com. That means a buyer who closed on a house just before the tax-credit program expired in April 2010 collected $8,000 but has since lost $15,000 in value. Those who bought earlier in the program have done worse; the median price is down $20,000 from March 2009.

Of course, one doesn’t actually lose money on an asset until it’s sold.  Eventually, housing prices will start to rise again, and the loss will be absorbed, as long as the homeowners don’t have to move in the meantime.  Still, the program created more negative equity for homeowners, a problem that was already becoming an epidemic, and housing prices are still falling as a result.

That matters in this case. Most of these buyers were likely to have bought anyway, as the steep, immediate drop in demand after the expiration of the tax credits suggested, just as in the Cash for Clunkers program.  But they may have waited for prices to hit a rational level if the taxpayer subsidy hadn’t been dangled in front of them.  Prices would not have artificially remained in place either way, so even if they were inclined to buy in the same or next quarter, they would not find themselves quite as deeply underwater as they are now.  For those who have to sell early, that may be enough to determine whether their next home decision is to purchase or to rent — and whether to default or to honor their loan.

Jack Hough says the administration owes taxpayers and homebuyers an apology, and drafts one for the White House to use:

“We thought the $8,000 tax credits would raise house prices and spur the economy. We were wrong. For starters, it makes no sense for a housing affordability program to have the stated goal of raising prices, because higher prices mean less affordability, not more. Another thing: The program didn’t work. We squandered taxpayer cash, increased the debt and lured many Americans into losses. We’re deeply sorry. We’ll try not to repeat the mistake. If anything, in light of America’s daunting fiscal challenges, we’re going to consider sun-setting costly, existing programs that lure house buyers, like the mortgage interest deduction and capital gains exemption, which together are more than 10 times as expensive as the expired tax credit program, costing about $1,200 per household last year alone.”

I’m sure they’ll get right on it … right after their apologies for the failure of Porkulus, Cash for Clunkers, the FY2011 budget, the FY2012 budget (both versions) ….


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Jack Hough says the administration owes taxpayers and homebuyers an apology

PBHO is sorry, sorry that all you flyover hicks can’t understand his brilliance through your inbred racism.

Bishop on May 11, 2011 at 3:38 PM

Makes perfect sense. There was a big spike in prices as people were having bidding wars just to get the $8K. Get $8K but spend $20K more on the house than you would have spent if you waited 6 months once prices fell back down. BRILLIANT!!

Americans are economic imbeciles for the most part. Not only that but they have been fed a steady diet of “real estate is the best investment you can make” over the past 50 years and especially over the last 10 years.

angryed on May 11, 2011 at 3:39 PM

Jack Hough says the administration owes taxpayers and homebuyers an apology, and drafts one for the White House to use:

Laugh of the day! That’s rich….say “Jack Hough” quickly and you get the point.

search4truth on May 11, 2011 at 3:40 PM

Boehner Has Grown A Pair — maybe he can do something these out of control taxes

Nearly Nobody on May 11, 2011 at 3:40 PM

Commie Socialists lightest hit.

The Mega Independent on May 11, 2011 at 3:40 PM

For those who have to sell early, that may be enough to determine whether their next home decision is to purchase or to rent — and whether to default or to honor their loan.

They shouldn’t have bought over their means in the first place.

Yeah, I know it is cold hearted to say. But the truth freaking hurts.

upinak on May 11, 2011 at 3:41 PM

Of course, one doesn’t actually lose money on an asset until it’s sold. Eventually, housing prices will start to rise again, and the loss will be absorbed, as long as the homeowners don’t have to move in the meantime.

No.

You lose money when you spend $185K on an asset that you could have bought for $170K. Even if one day you can sell it for $200K, you’ve still lost $15K on the deal. That $15K could have been put to better use somewhere else and the opportunity cost of spending $185K vs. $170K is a real loss.

angryed on May 11, 2011 at 3:42 PM

Americans are economic imbeciles for the most part. Not only that but they have been fed a steady diet of “real estate is the best investment you can make” over the past 50 years and especially over the last 10 years.

angryed on May 11, 2011 at 3:39 PM

More like over 20. Remember the last housing bubble burst?

upinak on May 11, 2011 at 3:42 PM

If we had just robbed the rich a little more(stopped giving them tax credits or making them ‘pay their fair share’) and spent more on the program, it would have worked, trust us.

/your friendly neighborhood Proggies.

Chip on May 11, 2011 at 3:45 PM

“… right after their apologies for the failure of Porkulus, Cash for Clunkers, the FY2011 budget, the FY2012 budget (both versions) ….”

You forgot the Community Reinvestment Act…

Seven Percent Solution on May 11, 2011 at 3:48 PM

Aside from offing Bin Laden, has this regime done anything right?

rbj on May 11, 2011 at 3:53 PM

1 thing that has made housing prices collapse more than they probably would otherwise, is the law the Dems passed to forgive Short Sales on Income taxes. i.e. whatever the short sale difference is you currently do not have to report as Income and pay Income Taxes on them.

That law last thru 2012, and it is basically giving Incentive for sellers to unload their homes at bargain prices because they do not care what it ends up selling for and just won’t rid of it. Once this law is over, and the Income tax would have to be paid, I imagine people won’t sell so cheap so quick and push prices higher.

jp on May 11, 2011 at 3:54 PM

OT Spain got hit with an earthquake. When was that one suppose to hit Italy?

upinak on May 11, 2011 at 3:55 PM

also, there are some who bought in late 2008 who got $7500, instead of $8k….and worse is they are currently paying it back, $500 per yr. Where as had they bought later on, in 2009, they would’ve got $8k cash and not have to pay a thing back.

jp on May 11, 2011 at 3:57 PM

Ahh well, throw it on the heap of money lost based on interest paid in just 3 years of paying on my loan. …and I even got in on the credit early so have to pay back the $7,500 I got for mine. Eff’d coming and going.

Youngs98 on May 11, 2011 at 4:00 PM

The median home value fell to about $170,000 in March from $185,000 a year earlier, according to Zillow.com. That means a buyer who closed on a house just before the tax-credit program expired in April 2010 collected $8,000 but has since lost $15,000 in value.

This is a ridiculous analysis. It assumes that the homebuyer credit was fully responsible for the $15,000 decrease in value, and I don’t see any evidence for that. In fact, home prices have undergone drastic fluctuations over the past couple years, and it’s extremely difficult to determine which factors cause which fluctuations.

Only if you could point to evidence that shows that the credit caused a price increase of $X, where $X is greater than $8,000, could you conclude that the credit hurt homebuyers.

(Not to mention the fact that if you truly believe in the free market, then you can’t really believe that a $8,000 credit would drive prices up by more than $8,000.)

tneloms on May 11, 2011 at 4:00 PM

You lose money when you spend $185K on an asset that you could have bought for $170K. Even if one day you can sell it for $200K, you’ve still lost $15K on the deal. That $15K could have been put to better use somewhere else and the opportunity cost of spending $185K vs. $170K is a real loss.

angryed on May 11, 2011 at 3:42

Just because the price is $170K now, doesn’t mean that it *would* have been $170K a year before had it not been for the tax credit. I don’t see any evidence for that at all. Housing prices have undergone major fluctations (and a drastic overall drop) over the past couple of years.

tneloms on May 11, 2011 at 4:02 PM

Honestly Ed, do people who bought homes in that time frame, predominately younger people trying to start families, really deserve to be called “suckers?”

Excuse us for not being born long enough ago that we could buy houses or go to college before the Baby Boomers took over and turned everything we try to do for our families into a boom and bust bubble cycle.

Houses are ruined as a safe and respectable investment. Higher Education is ruined as a safe and respectable investment. Maybe I should just be grateful that I wasn’t aborted like half of the Americans my age. Is there anything your generation can’t destroy?

livefreerdie on May 11, 2011 at 4:02 PM

….and on, and on, and on….the list is too long

cmsinaz on May 11, 2011 at 4:06 PM

tneloms on May 11, 2011 at 4:02 PM

tneloms on May 11, 2011 at 4:00 PM

Lemme guess…you sell real estate for a living. And so you fancy yourself an expert in housing when really you’re an expert at installing and taking down “For Sale” signs. Your expert opinion is always BUY REAL ESATE!! Asking a real estate agent their opinion on real estate is like asking a wolf for an opinion on eating sheep.

And yes prices were driven up by more than $8K, because people were told pay an extra $30K for this house. It’s only an extra $100 a month. But think how awesome it will be to get that $8K check for the govt.

angryed on May 11, 2011 at 4:08 PM

For starters, it makes no sense for a housing affordability program to have the stated goal of raising prices, because higher prices mean less affordability, not more.

Don’t ever accuse THESE Poli Sci retards of being slow off the mark!

MNHawk on May 11, 2011 at 4:08 PM

housing prices will start to rise again, and the loss will be absorbed,

No, the dollar just keeps becoming more worthless you have to consider how many potatoes they can buy with the money they get from the sell compared to how many potatoes the house cost when they bought.
when you consider interest, insurance, taxes, HOA dues and upkeep it is still a blood bath.

esnap on May 11, 2011 at 4:09 PM

Honestly Ed, do people who bought homes in that time frame, predominately younger people trying to start families, really deserve to be called “suckers?”

Excuse us for not being born long enough ago that we could buy houses or go to college before the Baby Boomers took over and turned everything we try to do for our families into a boom and bust bubble cycle.

Give it a rest. I’m in my 30s. I bought a house when I was 24 as the bubble was getting under way. Sold it when I was 29. Made a killing on it.

This has nothing to do with old or young. It has to do with gullible and non-gullible people. Gullible people believe the govt and the real estate industry when they’re told real estate is a great investment, even as every piece of data around them says otherwise. You fell for the propaganda. Don’t blame anyone else but yourself.

angryed on May 11, 2011 at 4:13 PM

So should people be buying homes now?

nazo311 on May 11, 2011 at 4:17 PM

Lemme guess…you sell real estate for a living. And so you fancy yourself an expert in housing when really you’re an expert at installing and taking down “For Sale” signs. Your expert opinion is always BUY REAL ESATE!! Asking a real estate agent their opinion on real estate is like asking a wolf for an opinion on eating sheep.

And yes prices were driven up by more than $8K, because people were told pay an extra $30K for this house. It’s only an extra $100 a month. But think how awesome it will be to get that $8K check for the govt.

angryed on May 11, 2011 at 4:08 PM

LOL! (Slaps knee) Sign installer! And I bet she paid a good price to get her sign installation license!

j_galt on May 11, 2011 at 4:17 PM

I bought just after the program ended. I got my $8,000 off of the price, instead of getting a subsidy at the expense of my fellow taxpayers.

Vashta.Nerada on May 11, 2011 at 4:19 PM

Give it a rest. I’m in my 30s. I bought a house when I was 24 as the bubble was getting under way. Sold it when I was 29. Made a killing on it.

angryed on May 11, 2011 at 4:13 PM

I think you totally missed the point, good luck for you buying at the start of the bubble then selling.

The point was about those who bought at current market price as they were in the market 2000-2009 range, currently underwater due to timing of purchase.

could’ve easily been you had you been in the market during that time period.

jp on May 11, 2011 at 4:22 PM

Is there anything your generation can’t destroy?

livefreerdie on May 11, 2011 at 4:02 PM

Age-ist!

I bet you curse us geezers that walk too slow down the grocery isle, too.

iurockhead on May 11, 2011 at 4:22 PM

That credit was pretty universally accepted as a gift to SELLERS and BANKS since it artificially inflated the price. This benefited the seller in a higher payment and the bank in the form of higher fees since they are often a percent of the sale.

If you didn’t realize that the buyer was was the one who lost on this, you must get your economics education from the MSM.

OBQuiet on May 11, 2011 at 4:24 PM

Lemme guess…you sell real estate for a living. And so you fancy yourself an expert in housing when really you’re an expert at installing and taking down “For Sale” signs. Your expert opinion is always BUY REAL ESATE!! Asking a real estate agent their opinion on real estate is like asking a wolf for an opinion on eating sheep.

And yes prices were driven up by more than $8K, because people were told pay an extra $30K for this house. It’s only an extra $100 a month. But think how awesome it will be to get that $8K check for the govt.

angryed on May 11, 2011 at 4:08 PM

Er, no. I’m not even remotely involved in real estate, and I don’t have any particularly strong theories about which way the market is moving or whether one should buy.

I’m just making the obvious observation that if prices were at $185K one year and $170K the next year, that doesn’t mean you can conclude that the tax credit was responsible for the $15K price difference. Especially when the price movements have been enormous over the past few years. Do you disagree with that? Is there good evidence presented here that the tax credit was responsible for the $15K price decrease?

tneloms on May 11, 2011 at 4:25 PM

angryed on May 11, 2011 at 3:39 PM

It’s not just Americans.

jdkchem on May 11, 2011 at 4:27 PM

like the mortgage interest deduction and capital gains exemption, which together are more than 10 times as expensive as the expired tax credit program, costing about $1,200 per household last year alone.”

Huh? Since when do not paying taxes cost households money?

unclesmrgol on May 11, 2011 at 4:29 PM

I bet you curse us geezers that walk too slow down the grocery isle, too.

iurockhead on May 11, 2011 at 4:22 PM

I know I do! But, to be fair, I usually open doors for you old folks. I don’t want ya throwing out your hip, or knee, or ankle, or wrist, or elbow, or irritating your joints, etc …

j_galt on May 11, 2011 at 4:29 PM

OT Spain got hit with an earthquake. When was that one suppose to hit Italy?

upinak on May 11, 2011 at 3:55 PM

TODAY !

pambi on May 11, 2011 at 4:30 PM

It is a good argument that both lost out, but only the buyer has lost in the short term, but in the long term they will get their money back, plus.

WoosterOh on May 11, 2011 at 4:31 PM

j_galt on May 11, 2011 at 4:29 PM

Whippersnapper. Get off my lawn.

iurockhead on May 11, 2011 at 4:35 PM

I have owned 3 homes in my life.Always kept up with the Joneses with upgrades and modern fixtures.Property and school taxes are high in Texas and the pols never raise the tax rate only the value each year.They are off the hook on raising taxes but the payout goes up annually.I realized all I was doing was keeping a property nice and getting penalized for it.I now lease a nice home in a nice hood and when tha AC goes out that $10,000 dollar repair goes to the owner not me.No more mortage,taxes or worries.BTW my property and school taxes and insurance was $7600 per year on a #140,000 home.Come on down to Texas.

docflash on May 11, 2011 at 4:37 PM

like the mortgage interest deduction and capital gains exemption, which together are more than 10 times as expensive as the expired tax credit program, costing about $1,200 per household last year alone.”

Huh? Since when do not paying taxes cost households money?
unclesmrgol on May 11, 2011 at 4:29 PM

You’re missing the emphasis…
It “cost” the GOV’T $1,200 per household. It saved the taxpayer that much, but it came at the expense of gov’t tax collections. The money does not belong to the taxpayer…

SnowSun on May 11, 2011 at 4:37 PM

The money does not belong to the taxpayer…

SnowSun on May 11, 2011 at 4:37 PM

Really. WTF do you think the government gets the money besides China?

upinak on May 11, 2011 at 4:38 PM

upinak, I should have put a sarc tag on there.

SnowSun on May 11, 2011 at 4:41 PM

I’m still trying to figure out how something “built” by illegals and homegrown dopeheads guided by the expertise and wisdom of alcoholic supervisors can be so expensive?

Dr. ZhivBlago on May 11, 2011 at 4:44 PM

The point was about those who bought at current market price as they were in the market 2000-2009 range, currently underwater due to timing of purchase.

could’ve easily been you had you been in the market during that time period.

jp on May 11, 2011 at 4:22 PM

No it couldn’t have been me. I timed the market not by luck, but by knowing what was happening, ie a bubble was about to burst and I got out. Anyone who bought 2005-2010 is quite frankly a fool economically speaking. And a fool and his money are always parted.

angryed on May 11, 2011 at 4:45 PM

j_galt on May 11, 2011 at 4:29 PM

Whippersnapper. Get off my lawn.

iurockhead on May 11, 2011 at 4:35 PM

Will do, gramps. ;)

j_galt on May 11, 2011 at 4:47 PM

To the 0bama regime, something so bad as subprime lending must be done again – it’ll be different this time, I swear.

Rebar on May 11, 2011 at 4:48 PM

Crazy thought here, but perhaps the Federal government shouldn’t be attempting to manipulate markets even under the guise of ‘helping.’

Oh, what I am I thinking? The government is run by the smartest, wisest, most ethical people in the land who know how to shape our lives better than we do. Lets give them more power!

chimney sweep on May 11, 2011 at 4:51 PM

So should people be buying homes now?

nazo311 on May 11, 2011 at 4:17 PM

Depends what home and where? In many areas the low end has bottomed and is a good buy. High end, wouldn’t go near it for at least another year and possibly even longer.

angryed on May 11, 2011 at 4:51 PM

To the 0bama regime, something so bad as subprime lending must be done again – it’ll be different this time, I swear.

Rebar on May 11, 2011 at 4:48 PM

1932: FDR’s slogan A Chicken in Every Pot
2012: Obama’s slogan, a $500K mortgage for every deadbeat

angryed on May 11, 2011 at 4:56 PM

Anyone who bought 2005-2010 is quite frankly a fool economically speaking. And a fool and his money are always parted.

angryed on May 11, 2011 at 4:45 PM

Umm not everyone who bought a house(s) was a fool. You just have to know the market and check who owns what outright on the web, depending on the city and if they do deed/owner entry for the area. I bought my house(s) for what they were worth.

upinak on May 11, 2011 at 5:00 PM

tneloms:”(Not to mention the fact that if you truly believe in the free market, then you can’t really believe that a $8,000 credit would drive prices up by more than $8,000.)”

???

Why not? Artificially lowering the cost on the demand side means there will be more demand that would naturally occur. This demand would drive up the supply side price. How much it goes up would depend on many factors beyond just the subsidy. I seem to remember this being referred to the the Elasticity of demand. As small increase in demand can have a MAJOR affect on price. I doubt it would more than offset the subsidy but I can envision cases where it might. Particularly in a market not noted for rational behavior.

Of course these aggregate numbers are junk. If the ‘market’ consisted of (9) $100K and (1) $1.1M homes, you would have an average home price of $200K, The 9 homes could gain and be selling at $110k while the mansion drops to $900K and the “average” home price would have dropped to $189K. So only the guy buying the overpriced mansion suffered.

You need information on the market segmentation and the changes within and the Geographic location is also quite relevant since a lot of these down turns are in particular markets

OBQuiet on May 11, 2011 at 5:03 PM

Umm not everyone who bought a house(s) was a fool. You just have to know the market and check who owns what outright on the web, depending on the city and if they do deed/owner entry for the area. I bought my house(s) for what they were worth.

upinak on May 11, 2011 at 5:00 PM

Say you bought a house in 2005 and today you can sell that same house for the same price (not sure where in the country this is true, but I guess there is always an exception to the general rule).

Inflation alone has eaten 20% of the money you spent in 2005. Add to that 2-3% in closing costs to buy and 5-8% closing costs to sell and you’re looking at about a 30% loss in real terms. Add in another 10-40% loss in nominal terms on the value of the house, which is typical for most homes in the counties 2006-2011 and my fool comment isn’t too far off.

angryed on May 11, 2011 at 5:05 PM

tneloms:”Is there good evidence presented here that the tax credit was responsible for the $15K price decrease?”

I think there is a reasonable amount of evidence that it did increase the price some and encouraged people to jump in prematurely. Absent the credit, prices would have been some number lower and sales would have been some level slower( pushing prices lower still). So to a certain extent, the credit can be blamed for encouraging the purchases that resulted in the losses.

OBQuiet on May 11, 2011 at 5:10 PM

from someone in the industry, I think your analysis is spot on.

Kaptain Amerika on May 11, 2011 at 5:11 PM

Give it a rest. I’m in my 30s. I bought a house when I was 24 as the bubble was getting under way. Sold it when I was 29. Made a killing on it.

You’re a genius! Too bad everyone didn’t sell their house when you did. Then everyone could have made a killing and everyone could be rich. And everyone could ride unicorns to their jobs as astronauts.

You missed the point, which I’m assuming is probably a common occurence for you. People need places to live and people with families don’t often have the luxury of buying and selling houses like commodities. Why does Ed need to call people “Suckers” who are just trying to raise their families in a house?

livefreerdie on May 11, 2011 at 5:11 PM

OBQuiet on May 11, 2011 at 5:03 PM

Elasticity of demand wouldn’t really do it, but yes, there are all sorts of bizarre factors (including psychological ones) that could make this happen. But my point was just that according to simple models that claim that the free market figures out the “true price” of a good, if you add $8k in value, the “true price” can only move by that amount, so the market price shouldn’t move by more than that amount.

In any case, I think we both agree that there are many factors that led to the $185K to $170K difference, which itself is just an aggregate and is not very meaningful, and that claiming that the tax credit caused a $15K loss is unfounded.

tneloms on May 11, 2011 at 5:12 PM

I think there is a reasonable amount of evidence that it did increase the price some and encouraged people to jump in prematurely. Absent the credit, prices would have been some number lower and sales would have been some level slower( pushing prices lower still). So to a certain extent, the credit can be blamed for encouraging the purchases that resulted in the losses.

OBQuiet on May 11, 2011 at 5:10 PM

I completely agree with this. My point is that this analysis claims that it’s not some or to a certain extent, but rather the full $15K decrease that’s being blamed on the tax credit, and I don’t see any evidence to back that up. If the tax credit caused an artificial inflation of less than $8K in price, then the homebuyers did in fact benefit from the tax credit, contrary to the claim of this post and article.

tneloms on May 11, 2011 at 5:16 PM

You missed the point, which I’m assuming is probably a common occurence for you. People need places to live and people with families don’t often have the luxury of buying and selling houses like commodities. Why does Ed need to call people “Suckers” who are just trying to raise their families in a house?

livefreerdie on May 11, 2011 at 5:11 PM

And they can’t raise their families in a rental house because…..

In the vats majority of vases one could have rented a house for significantly cheaper than one could have bought it for 2005-2010. Even taking into account the tax deduction (which 70% of people don’t get because they don’t itemize).

But because of the propaganda that apparently you have bought into, people thought they HAD to buy. What? Raise my kids in a rental? Why that’s child abuse. What? rent a house and not be able to paint the walls pink for little Suzie’s room? CPS will come take Suzie away from me for being an unfit mother!!

Better to go into unnecessary debt to buy a house that will lose tens of thousands of dollars just so I can say I am a “home owner”. Right?

I think you need to stop watching HGTV for a while.

angryed on May 11, 2011 at 5:29 PM

like the mortgage interest deduction and capital gains exemption, which together are more than 10 times as expensive as the expired tax credit program, costing about $1,200 per household last year alone.”
Huh? Since when do not paying taxes cost households money?

unclesmrgol on May 11, 2011 at 4:29 PM

It’s just like lowering the tax rates has to be “paid for”. It’s a zero sum game, dontcha know. I’ve been around long enough to know that lowering taxes results in a net increase to the treasury…to a point. Some folks don’t pay attention to the numbers or are deliberately lying.

odat on May 11, 2011 at 5:34 PM

If the tax credit caused an artificial inflation of less than $8K in price, then the homebuyers did in fact benefit from the tax credit, contrary to the claim of this post and article.

tneloms on May 11, 2011 at 5:16 PM

You’d have somewhat of a point if

a) prices didn’t inflate by more than $8K which is probably not so

and

b) the price inflation was paid for with cash. But take that $8K inflation at 5% over 30 years and it’s $15K. Not such a good a deal anymore

angryed on May 11, 2011 at 5:38 PM

…and these fools are STILL pressuring banks to make bad loans!!!

landlines on May 11, 2011 at 5:45 PM

You’d have somewhat of a point if

a) prices didn’t inflate by more than $8K which is probably not so

and

b) the price inflation was paid for with cash. But take that $8K inflation at 5% over 30 years and it’s $15K. Not such a good a deal anymore

angryed on May 11, 2011 at 5:38 PM

Regarding a), can you show me any evidence that prices inflated by more than $8K (or inflated at all) in response to the tax credit? I do not see any price increase at all from when the tax credit began, looking at this data: http://www.jparsons.net/housingbubble/ (I downloaded it and looked at the prices starting in November 2009, which is when the credit started). This doesn’t mean there *wasn’t* a positive effect on the price, since there are many factors involved, but I certainly don’t see any evidence that there was a price increase.

I don’t understand what you mean by b). Can you clarify? Either way, you seem to presuppose an $8K price inflation, which I don’t see evidence for.

tneloms on May 11, 2011 at 5:48 PM

Unless your lucky enough to grab a model home that the bank wanted off their books that is still valued over what you payed.. 8000 was a bonus…

CaptainObvious on May 11, 2011 at 6:52 PM

It’s just like lowering the tax rates has to be “paid for”. It’s a zero sum game, dontcha know. I’ve been around long enough to know that lowering taxes results in a net increase to the treasury…to a point. Some folks don’t pay attention to the numbers or are deliberately lying.

odat on May 11, 2011 at 5:34 PM

Tax deductions are not the same thing as lower marginal tax rates. Tax deductions really are spending through the tax code. To really see the true size of government, we should move all deductions and credits from the tax side of the balance to the spending side.

Count to 10 on May 11, 2011 at 8:34 PM

It’s unbecoming of Ed and cheapens his reputation when he mocks normal American people for making the financial mistake of buying a house during that six year (and counting) period.

I understand that it gets under his skin that there were people who withdrew equity from their houses they couldn’t afford to pay back. It bothers me too.

But the vast majority of people who bought houses during that time period weren’t flipping houses or gaming the system and they don’t deserve to be treated as such.

livefreerdie on May 12, 2011 at 9:03 AM

also, there are some who bought in late 2008 who got $7500, instead of $8k….and worse is they are currently paying it back, $500 per yr. Where as had they bought later on, in 2009, they would’ve got $8k cash and not have to pay a thing back.

jp on May 11, 2011 at 3:57 PM

Count me as one of those who didn’t read the fine enough print to know it was a ‘loan’ and not a ‘credit’.

*shug* That angers me, but I don’t regret my home purchase. I bought a condo. I know they almost never sell for more than you pay, but I’m planing to live here for 15-20 years and it’s about the same as rent. Plus I get to renovate it as I see fit.

Upside: I don’t have to mow my lawn, and I got my roof repaired by the association after a bad wind storm.

Downside: Loud neighbors and I can’t yell at the kids to ‘Get off my lawn!’

The_Livewire on May 12, 2011 at 11:12 AM

I guess we can be thankful that this didn’t pass:

http://republicanwhip.house.gov/Solutions/HousingPlan.pdf

15K?? Good grief.

They’re all morons. Congress needs an enema.

jondun5 on May 12, 2011 at 3:00 PM