According to home values released by Zillow on Monday of this week, home values have fallen for a 57th straight month[1]. And while this is not good news for anyone, it has hit beneficiaries of the $8,000 tax credit for first-time homebuyers particularly hard, as, according to the Wall Street Journal, they “lost twice as much to falling house prices as they gained from the incentive”[2]. The initiative began as an incentive for first-time buyers, then was expanded to include a $6,500 credit for existing homeowners who made a new purchase. The program ran from January 2009 until September of 2010 and, many critics argue, artificially and temporarily improved the housing market at the cost of a faster recovery. Typical homes bought during that period have lost about $20,000 in value since that time.
To make matters worse, the IRS recently reported that it paid $26 billion in homebuyer credits during the running time of the program. However, it believes that “at least $513 million went to fraudulent claims[3]. Common incidences of fraud included claimants that did not buy houses, claimants that filed twice and individuals who were underage or incarcerated.
The current administration has steadfastly maintained that its tax-credit program is the only good thing to happen to the housing market in recent years. Do you agree, or do you think that it just prolonged the agony and may even have made matters worse?
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[1]http://online.wsj.com/article/SB10001424052748704810504576309532810406782.html?mod=WSJ_RealEstate_LeftTopNews
[2] http://blogs.wsj.com/developments/2011/05/11/the-8000-credit-cost-some-home-buyers-much-more/
[3] http://www.smartmoney.com/spend/real-estate/how-the-8000-tax-credit-cost-home-buyers-15000-1304981110838/?zone=intromessage
As with the overwhelming majority of government programs, this one is another bad joke. They say the road to hell is paved with good intentions. Congressional drones always have some compassionate sounding tripe to bend our ears with about government programs being launched, extended, and / or expanded. Unfortunately they typically achieve the opposite effect of their stated intent. Forget about raising the debt ceiling. Force the gang that couldn’t shoot straight to spend within the confines of revenue in the Treasury. Beyond that they can start laying off federal employees (IRS, Depts of Education & EPA would be a good start), as well as every writer of new regulations in every department of government. Time to take your government back, people, before they finish their job of destroying the country.
Well, I’m aware that some investors used that creit for their investment purposes. I guess all proper paperwork was filed, so that was legal. But I’m not so sure if complied the law: that credit was designed for the first time
home buyers.
When will the government learn that the free market is much improved without governmental interference? We as a country need to stop fixing other peoples’ problems and start allowing the marketplace to operate. The problems of the current housing crisis would be far less if the government had not artifically reduced interest rates. We need to start treating ourselves like adults and facing the consequences of our actions early and often.