Comments on: $6,500 Tax Credit – Save More $ by NOT Claiming

By: Investing 101

Investing 101 — Fri, 13 Nov 2009 22:49:10 +0000

To paraphrase a famous movie line, you had me at point #1

Living in NYC, where house prices are notoriously high, I’d be closer to your 2% example. Not enough to push me to buy, thank you very much!

By: Kevin@OutOfYourRut

Kevin@OutOfYourRut — Fri, 13 Nov 2009 21:31:40 +0000

Matt, you’re showing great courage in taking aim at this credit. Its being touted all over the financial world as manna from above.

I completely agree with you. The fact that the housing market “needs” this credit does not speak well of the strength of the market. To me it’s just an attempt to get around the largely withdrawn zero down programs, to which the real estate market became addicted and still can’t seem to function without.

As long as buyers have little to no skin in the game, the housing market will be on life support. A truly strong, self sustaining market doesn’t need subsidies to keep it functioning.

Back when I was a mortgage underwriter, we used to say “not everyone needs to own a house”, usually referring to the lack of money for a down payment. If you need assistance to buy the house, what happens when the roof or the furnace need to be replaced and there’s no subsidy to cover it?

Multiplied times millions of homeowners, you get the kind of real estate market we have now!!!

Methinks your comments are self-evident.

By: Matt Jabs

Matt Jabs — Fri, 13 Nov 2009 19:03:47 +0000

Thanks Joe.

It is a sweeping statement, and one that I firmly stand by. Very firmly. I will not cite specific sources because the evidence of further housing collapse, on a national scale, is overwhelming and all around us… it is simply a question of whether or not we choose to see it.

By: Joe Plemon

Joe Plemon — Fri, 13 Nov 2009 18:41:19 +0000

Matt,

While I totally agree with the premise of your post, I am curious about your assertion in points 2, 4, and 6 that housing prices are/will continue to go down. Aren’t housing prices highly regional…meaning they are going down in some areas of the country and not in others? Just a caution about making sweeping assumptions that may or may not be true depending on where one lives.

Thanks for a great, thoughtful post. When government offers a program, we need to practice kneejerk apprehension, realizing it is synthetic and temporary…and costly in the long run.

By: Sabrina Bremmer

Sabrina Bremmer — Fri, 13 Nov 2009 01:18:02 +0000

Here are some links for understanding banking:

7 Page article in The Times on Goldman Sachs
http://www.timesonline.co.uk/tol/news/world/us_and_americas/article6907681.ece?token=null&offset=0&page=1

Article in Rolling Stone on Goldman Sachs
http://www.rollingstone.com/politics/story/29127316/the_great_american_bubble_machine

The great American bank robbery:
http://vodpod.com/watch/2040248-how-to-rob-a-bank

How banks gained control of America:
http://video.google.com/videoplay?docid=-515319560256183936#

How to fix bad commercial banks that take in money from depositors. Simple. People power. The Dutch brought an arrogant bank to its knees in twelve days:

http://news.bbc.co.uk/2/hi/business/8323991.stm

By: Evolution Of Wealth

Evolution Of Wealth — Thu, 12 Nov 2009 18:27:56 +0000

Today we are left wondering what the affect on our futures will be. You make some great points surrounding government intervention. They are pulling from future demand to increase the demands of today. The question remains, where will tomorrows buyers come from if the government is giving them more and more incentives to buy today. Seems to be a short-sided approach. Reminds me of a stock business, how do I boost my numbers today so as to keep the stock price high. Who cares on the effect down the road, deal with it when we get there.

By: RRCarter

RRCarter — Thu, 12 Nov 2009 18:02:34 +0000

Matt, I TOTALLY hear you about government intervention, and many times have sat sulking by wondering: what would happen if we just let capitalism do it’s thing and let the market decide, chips fall where they may? How can we be so pro-market economy one minute, and perfectly willing to take govenrment money to prop a bursting bubble the next? I am not alone in my opinion that the wall street bailouts were like socialism for the rich. People take risks and they make money doing it, but when they lose money they want Uncle Sam to cover the losses? To me it’s like a large scale example of what happens on a smaller scale with the children of lenient parents who end up never being independent and always counting on mom or dad to bail them out of bad decisions…
BUT – I have to say I plan to take advantage of the credit, as the
houses I am looking at (we’re talking Detroit, here) are about 60k so it’s going to pay for about 10% of my purchase price. Plus, I was planning on buying a house anyway. As far as the housing market sinking further, many housing experts are feeling like sometime in 2010 is pretty much the rock bottom — so in the whole long-term scheme, we’re scaping the relative bottom when you are talking about a 30-year mortgage. And the other part of this big picture is that rates are at levels that could be among the lowest in our lifetimes. So it makes sense to lock-in to your largest debts now, tax credit aside.

By: Jeff @ Sustainablelife blog

Jeff @ Sustainablelife blog — Thu, 12 Nov 2009 17:45:17 +0000

Great post Matt, and I appreciate you taking the time for looking into the 6500. I realize the economics are different for the 8k credit, but how much false demand do you think the government is creating (or has created) with the one for soley first time buyers? Would they have bought anyway?
Of 2 friends that I know that have taken advantage of the 8k, one was looking to buy a house anyway, and the other took the 8k because it was there, and didnt really have the appropriate savings or anything.
At the end of the day, i think 6500 is much less than the amount of “value” most people lost from price peak 2 years ago. I’d stay (if i owned a home)