New Tax Rebate for HomeBuyers - Not Just for First Time Buyers Anymore

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Comment by Marita Topmiller on November 10, 2009 at 8:31am

Yes, I think even the second President Bush warned banks that they were lending too much money
to folks who weren't credit worthy.

Thanks Steve, I'll pick up a copy at the bookstore - one of my favorite hangouts.

Comment by Steve Stuck on November 9, 2009 at 11:41pm

I know one way to get our manufacturing back, cut corporate taxes to 10%. The rest of the world is around 25% right now that has been dropping the last decade. We are at 35% with state corporate taxes on top of that.

I am reading a book right now by Dr. Thomas Sowell called "The Housing Boom and Bust". Very informative and great perspective on how all this went down. The above mentioned he talks about along with many other areas in how the housing situation arose. I actually got into the meat of it while having this conversation with you. Pick it up sometime if you like that sort of economic reading. The most glaring aspect of this book, is the proof that many economists including the author were warning people of the governments policies in this housing bubble.

You just shake your heading reading this research.

Comment by Marita Topmiller on November 9, 2009 at 6:30pm

Hi Steve, the government is also buying up bonds to keep the interest rate artificially low. It's a sad state
of affairs.

I've been squawking like a parrot the last 20 years that we need manufacturing. Our country needs
something to export besides dollars. I am with you whole heartedly about finding a way to bring
manufacturing back on our shores.

The government is trying to sell the foreclosures as fast as they can, which is the reason for the $100
downpayment. But many of the vacant properties we see around town are not in foreclosure. They
are owned by absentee landlords who refuse to make them habitable. Many of those homes were
purchased by investment groups like the ones I saw in 2006, 2007 combing our town for cheap
deals. One of those groups, AF Properties based in Chicago, bought up 200 area homes and then
walked away - maybe into a jail sentence since the investor was charged with fraud. and many rental
homes were left vacant when the Mexicans who lived and worked here went back to Mexico after
the economic downturn. Many other properties are so bad that the city has begun tearing them
down, 536 last year. There is always a silver lining. The price of some homes has sunk so low
that people with entry level positions and some talent with a hammer and saw have picked up
properties in troubled neighborhoods for under $20k and turned them into homes again.

A little plug for the "nongreedy" among us. When my dad was Director of FHA - they were in the
black and forcing good building practices on builders who wanted to cut corners.

Thanks Steve. I appreciate your comments. I would be happy to see you seated on the board of
any of the groups I've worked with.

Comment by Steve Stuck on November 7, 2009 at 9:13am

I agree with you on the jobs part. I guess I am more saddened we have gotten to become a 71% consumption society when we need to be 50% consumption and 50% manufacturing. I do not see a lot of people understanding the role our dollar has being so low and the quality of life Americans will not have in the next coming years.

Our dollar can only strengthen by reducing our deficit and restructuring our taxes so investors want to come to our country so we can be an exporter again. No one is buying the dollar anymore let alone looking at America as a good investment overall. You may have small pockets of good investing, but overall we are seen for high taxes/regulation.

You are right the govt. is buying up homes but they are also creating a artificial market by not selling them like they should once people go into foreclosure. This is creating a false signal that home building is needed when it is not. The govt. just needs to get out of all housing period. Two things will happen 1. it will hurt like hell and 2. true recovery can begin to happen. Let alone the home prices would drop big time.

Comment by Marita Topmiller on November 6, 2009 at 11:41pm

Thanks, Steve Great article. Yes, we are in perilous times and the amount of debt this country is in
is staggering and real. We're just shifting the debt around like a shell game. The government is, in
effect, buying up foreclosures and selling them back to us. But at least there are still people who can
buy. These people are buying the properties at a discounted value. That's the way it is because
properties were over-vlaued. Of course the people buying, can buy because they have jobs. I
have read somewhere recently that unemployment is at 10.2% - that represents a lot of homes
that are/have been/or will be in foreclosure.

If we are creating a service based economy, as we seem to have been since Reagan was in office,
homes need to be cheaper, because serviced based jobs don't pay as much.

And the Fed will print however much money we need - leading to inflation. We are on a tight-rope.

An excerpt from the article you suggested is below:
"Despite signs of recovery in home sales and prices, rising delinquencies and unemployment levels mean
the housing market is still fragile, Freddie said. High unemployment, foreclosures and excess inventory
will impede the recovery "for some time" and push house prices lower, the company said."

Comment by Steve Stuck on November 6, 2009 at 8:34pm

Yet more evidence the tax credits are not working and the deepening loss of taxpayer money through quasi-government housing programs. This will only get worse......

Starting in 2010, the company will begin accounting for $1.8 trillion in mortgage-backed securities it guarantees on its balance sheet to meet new guidelines. This will increase interest income and interest expenses, and could have a significant negative impact on net worth, it said.

Here is the rest of the article....

http://finance.yahoo.com/news/Freddie-Mac-posts-5-billion-rb-3083454207.html?x=0&.v=3

Comment by Steve Stuck on November 6, 2009 at 2:37pm

Then why is the FHA is such a mess that their maybe a bailout needed for them? Interest rates rise on the federal reserve which has them at zero percent in lending to the banks. Why is the Federal reserve buying up $1.25 Trillion in mortgage backed securities if this tax credit is the solution? We both know the Federal Reserve will probably print the money.

Believe what you want, but we are at the beginning of our financial downturn and NAFTA should be the least of your concerns.

Comment by Marita Topmiller on November 6, 2009 at 2:27pm

Hi Steve, thanks for your input. There's another side to this as well. I have sold several homes to first time home buyers who used this program - not for a downpayment. To use this money as a downpayment, one must take out a loan with their financial advisor, I've been told, at interest, until their tax rebate comes when they can repay that loan. I know of no one who has used the rebate for a downpayment.
Two of my first time homebuyers who got that credit, purchased bank owned homes that had been sitting
in inventory for some time and needed work to bring them back up to full value, thus improving the
neighborhoods and putting the homes back on the tax roles. My clients used the tax rebate to purchase
durable goods - appliances and flooring, paint, contractors and retiring debt - all good for the economy.

Housing historically leads the country into recession and housing historically leads the country out of
recession.

My main nag is that the country needs jobs. We have lost too many to NAFTA, etc.

A word on FHA: I have sold one FHA home to a first time homebuyer. It likewise needed considerable
work to bring it back toward its assessed value of $147,000. It sold for $105,000. And FHA asked for
a downpayment of $100. This special $100 downpayment is a tool FHA is using in Indiana to get
inventory homes sold and back on the tax roles. Vacant homes are a danger to our neighborhoods,
and drive the value of neighboring homes down further.

Interest rates: As the stock market improves, money floods out of bonds and into stocks, thus
causing interest rates to rise.

Comment by Steve Stuck on November 5, 2009 at 8:41pm

This is terrible. Your prompting up a housing market that will still be declining with foreclosures well into 2012. FHA is terrible shape and use programs like this by taking this $8,000 tax credit as a down payment. Housing prices are predicted to decline by 11% next year alone.

Interest rates need to be raised to get all this phoney money out of our system and let the housing market properly decline. Housing inventories are way over.