The FED manipulation of 2002/03 caused the housing bubble not the some people getting into houses they couldn’t afford. I can’t believe people just spew what they hear on msm. Of course they want you to blame “the people”, it directs attention away from the central banks who issue fiat currency and credit. The people should have demanded that the fed accept the recession and let it correct itself without market manipulation back in 1980’s. Instead they have once again put interest rates near zero and injected massive amounts of fiat. I surely am not into a socialism but that is not what you have here, you have marxism with a fascist tinge. Currently it is 99.9% to the central banks and .01% to the people. We actually are paying(with interest) for them to steal 23+ Trillion. So go ahead and extend the tax credit.

I understand that as a buyer you want to pay less, and when the first-time home buyer credit expires, I expect buyers in your situation will be willing to pay less, not more.

AMS – we don’t have a house to offer a contract on yet; even if we did – you can’t put that in a short sale contract, because it’s not the seller, it’s the bank that holds it up. Like they care! They got their bail outs to fund their executive bonuses – they don’t care about the average person.

Did you consult with an attorney prior to writing an offer?

(I should note that all first-time home buyers will lose the credit, if not extended, so the seller has an incentive to sell prior to expiration.)

Here’s my complaint: the reason it’s taking us so long & that we want the credit extended is that the majority of what’s out there are short sales, which can take 4-6 months to close! So our search has been very limited, to foreclosures & regular sales, of which there are very few. If they would extend the deadline, we’d have enough time to pursue a short sale…

Okay, because I know you’ll ask: we had a financial situation that prevented us from entering the market until August.

Like I said – just another slant on why I’d like the deadline extended. I’m okay with leaving it at $8000 – just give me more time!

We’ve been delaying the day of reckoning for almost a decade (cushioning the tech bubble pop with low interest rates and the property bubble). One big and ever increasing Ponzi scheme. The current stimulus is just the latest part of that.

I AGREE 100%…

If you can’t make more than 75k to qualify, then the best you are going to do is an overpriced condo in Seattle. I will get the seat of my pants patched, and continue to sit on the barbed wire fence. Prices still have some explanin’ to do.

We’ve been delaying the day of reckoning for almost a decade (cushioning the tech bubble pop with low interest rates and the property bubble). One big and ever increasing Ponzi scheme. The current stimulus is just the latest part of that.

It’s time for America to be a man and face the music.

If it doesn’t get extended right away, the dual effects of seasonality and the number of people that rushed their purchases will make the winter sales and median price declines look particularly bad (from an NAR perspective), giving them ammunition to go back to Congress in the spring for a new tax credit. Basically, a stimulus to the realestate industry that was part of the whole mess in the first place. Somehow though, this doesn’t seem to get the same backlash as bank bailouts.

Yes, I’m a bitter renter, and I don’t want my taxes (for the next 30 years) subsidizing other people’s overpriced home purchases.

The stage is set for a very ugly period in American Economics…..when the “recovery” does not come to fruitiion, and people finally throw up the white flag. The shadow inventory holders will give in, and forelcosures will sky rocket the next couple years.

Hang on to your hats. The roll coaster ride hasn’t even got to the scary part yet. The only question is whether we will have more ’stimulus’ like Japan or let it fall to true market value.

.

The market did stabalize much more than I would have ever expected. For that it was a huge success for Obama. It also looks like Health Care and missile defense are also big wins.

In my opinion all of this good news is coming at a time when the housing market is set to collapse. The better news is that the construction industry has also turned from housing units to apartment buildings. We are in for more declines in housing prices.

Why buy when you can rent for less?

RE: James Lupori @ 23 – I’m not sure if you’re being sarcastic or not, but even as a likely eventual homebuyer I’m all in favor of eliminating the mortgage interest deduction. In practice it is an incentive to take on as large a debt as possible and never pay it off. Pretty dumb IMO.

I think over the years they have messed with how much can be deducted. It really should be limited to your original loan amount, or your original purchase price at the most. I think it used to be the latter, but seem to recall it’s now current value as an upper limit.

Purchase-Money Tax Credits
Mortgage Interest Deduction
Subsidized / Guaranteed Low-Requirement Mortgages (up to over 700K in certain areas!)
Artificially Depressed Interest Rates
Untaxed Imputed Income on Durable Property

Take away the pillars and the roof falls in.

steps 1-3 will continue to happen for several years as an attempt to continue to subsidize/buffer the depreciation of real estate. I know many here will rationalize; what’s the point of doing this? It won’t work? Why buffer the fall with taxpayer money and new buyers (dupes) savings. I agree, but that won’t stop politicians continuing to appear as if they are actively doing something about this mess.

This is just another example of how policy makers resort to the SAME strategies that led to the asset bubble in the first place as the “cure”. It’s the same thing as an alcoholic deciding to drink more whiskey to avoid feeling the pangs of withdrawal: it can delay the consequences but doesn’t address the real problem.

Perverse economic incentives from the government have long encouraged an over-investment in real-estate (e.g. mortgage tax deduction, super-low mortgage rates from GSEs that were tacitly guaranteed by the government), which not only leads to over-capacity but also a lack of investment (and savings) in other sectors that would create product economic activity.

T’hese latest tax credits are just more of the same (i.e. lame attempts to encourage people to buy real-estate than to do something else with their money).

By the end of this administration dollar bills will be printed on soft paisley paper and issued in rolls with a hollow cardboad tube in the center…

Too bad Obama was left with a choice of either increasing debt or re-entering the Stone Age.

I think it will be extended and opened up to more people, not just first time homebuyers and maybe not $15,000 but closer to $8,000.

If the Dems want heath care for all, they’re going to have to curtain spending in other areas. I think letting this home tax credit end might be one of those areas. Besides, they’ve already gotten the political credit for “doing something to fix the housing crisis.”

That said, I think it’s 50/50 that it gets extended in some form.

Other proclamations caveat the “recovery” with a “must have housing stability in 2010.”

If that doesn’t happen, all bets are off for the second half of the year (2010).

I think it will be extended and opened up to more people, not just first time homebuyers and maybe not $15,000 but closer to $8,000.

I’m not for this provision, but government officials will want to make it through the mid-term election period. After that, if our economy and future collapse because of spending what do they care.

Let’s not forget that the tax credit will end up costing twice what was predicted. When serious discussions start on extending it, it will most likely carry a higher stated price tag than it did last year.

I don’t understand how they could have missed the projections so badly.

I wouldn’t bank on that. The Fed is independent and the Treasury can disregard any recommendation from Bernanke. Remember Greenspan criticized the Bush tax cuts and further fiscal stimulus in 2003 but it went through anyway (which contributed to Obama’s deficit the Republicans keep harping about). The seeds of bickering has already been set and it will only get worst.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aNyCH56bnBLU

Japanese government and BOJ went through the same process and the central banks independence was questioned. Even if Ben wants to remove stimulus the Treasury can extend the tax credit.

The White House is considering extending an $8,000 tax credit for first-time homebuyers.

Spokesman Robert Gibbs says the administration’s economic team is evaluating the tax credit’s impact on new home sales and will make a recommendation to the president.

Longer article on Bloomberg is not terribly optimistic either: Homebuyer Tax-Credit Extension Gains Lawmaker Support

The bill, first introduced in June, failed in a 47-50 Senate vote in August.
…
Mark Weinberger, an Ernst & Young LLP vice chairman who negotiated President George W. Bush’s tax cuts while working at the Treasury Department in 2001, said extending the homebuyer credit will be a tough sell in Congress with budget deficits exceeding $1 trillion.

“Even the most routine extenders are going to be under additional scrutiny,” he said, referring to a collection of dozens of other temporary tax breaks that are renewed every year or so. “Even if it’s extremely popular, it’s going to have to be matched up with something unpopular” such as a tax increase on other Americans to pass, Weinberger said.

“You can’t take it for granted in the current budget situation,” he said.

If we can quantify the answers to these questions to even a order of magnitude, it should go a long way to answering The Tim’s questions of ‘Is it likely to be extended? Why or why not?’

I think the credit will not be extended. Politically it doesn’t look good to say that the recession is over and then extend the credit. I also think the primary reason for the stimulus is so that the rich who didn’t anticipate the crash can cash out. Those folk have had ample time. Now it’s best for the rich that the final collapse to equilibrium be allowed to occur.

BINGO!

I think the credit will not be extended. Politically it doesn’t look good to say that the recession is over and then extend the credit.

That was my thinking exactly when I saw the highly publicized proclamation by Bernanke the other day. No way do I think the recession is really over, but if the powers that be are going around declaring it to be, that makes it far less likely that additional “stimulus” junk like this will be saddled on future taxpayers.

No different than the subprime bubble: sell, sell, sell and don’t worry about whether or not the buyers can make their payment when their ARM adjusts.

I’d like to see some healthy debate in Congress using CR’s numbers as to the true overall cost of the credit.

Where would we get the data to show what the consequences would be if we do not pass another tax credit?

Have you ever met someone that had cancer and they got their operation or removal procedure; then seemed somewhat better, a year later, after treatment. The problem with giving the treatment the credit for the cancer not getting worse is scientific. How do we know the cancer would not have stayed in remission a year later without treatment? Same thing if the cancer patient dies years later, how do we know they wouldn’t have died years later, without treatment too?

Lord only knows.

The same placebo experimentation logic applies with government bailouts, tax credits and reform bills. The government gave 100s of billions to the banksters and now claim they stopped Great Depression II from occurring. How do we really scientifically know? We don’t at all, its all wild conjecture.

I’ve blogged many times that today’s horrifying unemployment rate is chronically worsening and is clearly already at Great Depression I levels, if calculated the way it was in 1930. The government calls the horrifying unemployment statistics not a reason for calling today a depression; after all, the recession is over, if you’re the lucky top 50% of American household incomes still working. The unemployment bleeding is chronic they say, but slowing down a bit. They also artificially reduce it by like 50% and tell us the 10% unemployment rate is doable, even the DOW could hit 10,500 anyway, why not?

I’m the government and I’m here to help…LOL

I suspect it will be extended, and for far longer than what I’m suggesting. And they’ll probably pick yet another end date that makes little sense.