Ok, so 1.5 million taxpayers have applied for the $8,000 tax credit ($12 billion)...and about 100,000 of those taxpayers are under review for various possible violations like "they didn't buy a house"-ooops; they were under 18 years of age - wah--wah!; they weren't first-time homebuyers as defined by the program - you mean people can't read? etc,.
But get this...all taxpayers have to do right now to claim the tax credit is to complete a separate a tax form and send it in without any proof that they purchased the home. Congressional oversight committee is
just now considering the requirement of "proving the taxpayer bought the home". All you need to provide is a copy of the HUD-1 and IRS can sale verify with the Closing Attorney...Well, duh!
This program tries to cram 1.5 million homebuyers to purchase and close properties by 11-30-2009....the same homebuyers that were planning to buy homes anyway and did so for different reasons (and probably would have before 12-31-2009), but now in a shorter period of time (causing bottlenecks in loan processing causing some loans to be delayed beyond 11-30-09)...And it caught a number who were in the process of buying but waited until the start of this program (that caused slowdown before program started).
Even though Congress and the Senate are contemplating extension of the program through 6-30-2010, how is this stimulating anything? We are crunching the buy time down (which causes its own issues) and afterward, watch the slowdown...
First we had the $7,500 refundable tax credit (paid back within 15 years); then the $8,000 tax credit that didn't have to be paid back; and now this program may be extended...I believe there are a group of homebuyers waiting until they improve the stakes (that will slow purchases) and next year if program is terminated 6-30-09, buyers will slow their purchasing causing extra slow down in market.
Expect an accordion style market in the near future if the program is extended. However, if the program is ended, we can get back to a more normal market structure without the shot of "heroin" by the Federal Government.
Parker's Point of View: I don't favor any US Government involvement but if there is any tax incentive, create some form of incentive structure to address the real issues in real estate - too many short sales and foreclosures - Example: offer $8,000 tax credits for all Buyers (not just first time homebuyers) to purchase foreclosures or short sales and $3,000 for all others and either furnish immediate line-of-credit for repairs or wait 3-6 months for disbursement of tax credit money - that makes the incentive to clear distressed properties out faster and will help reimburse the remodeling budget.
Quote of the day: "Where's MY government cheese?"
