Poll: Do you know or know of anyone who would buy a home only if the $8k tax credit is extended?

Please vote in this poll using the sidebar.

Do you know or know of anyone who would buy a home only if the $8k tax credit is extended?

  • Yes (25%, 28 Votes)
  • No (75%, 82 Votes)

Total Voters: 110


This poll will be active and displayed on the sidebar through 09.26.2009.

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About The Tim

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market. Tim also hosts the weekly improv comedy sci-fi podcast Dispatches from the Multiverse.

24 comments:

  1. 1
    Ben says:

    I don’t know anybody who fits in this category.

    I think that the $8k credit is meant to push people over the line who are thinking about it but not 100% sold on the idea.

    When I see new $800k homes on the Eastside I wonder how changing the price 1% affects anything in a real way.

  2. 2
    Flying Ape says:

    I know two people who purchased already. One of them cashed out his 401K and payed the full asking price. I know this program has no effect with astute bubbleheads but you would be surprised at how naive some people are. (e.g majority of Americans who thought they could flip houses for profit in 05-08) His reasoning was that he would have positive equity by at least 10 years.

  3. 3
    Kary L. Krismer says:

    By Ben @ 1:

    When I see new $800k homes on the Eastside I wonder how changing the price 1% affects anything in a real way.

    Rather unlikely that someone purchasing an 800k home would be a first time buyer. The people selling such a house would be more likely to be selling to someone, who sold to someone, who sold to someone who was a first time buyer.

  4. 4
    softwarengineer says:

    RE: Flying Ape @ 2
    I’m With You Flying Ape

    Retirement comes faster than you think and try paying for the hamburgers with home equity…LOL….especially when home equity wealth is crashing. Even Suzy Orman considers stealing from retirements to pay off mortgage debt is ludicrous, especially if the loan is upside down…..if you you go bankrupt you can keep a 401K, but not if you used it for interest payments. She recommends just go bankrupt and keep your 401Ks.

  5. 5
    AMS says:

    RE: Flying Ape @ 2

    Future positive equity is one thing, but a positive present value on the future positive equity is yet another.

  6. 6
    AMS says:

    I’d take another Cash For Clunkers deal, but I sold my other ‘clunker.’ I don’t think that deal will come around again. Here it is a couple of months later, and I’d do the same deal again, twice again if possible.

    Of course the $4,500 incentive under CFC was about 25% of the retail price of my new car. I’d probably suggest a qualified home buyer seriously consider buying if he could get the government to subsidize the purchase by 25%. The first-time home buyer credit cap is 10% of the purchase price.

  7. 7
    Kary L. Krismer says:

    By softwarengineer @ 4:

    RE: Flying Ape @ 2
    I’m With You Flying Ape

    Even Suzy Orman considers stealing from retirements to pay off mortgage debt is ludicrous, especially if the loan is upside down…..if you you go bankrupt you can keep a 401K, but not if you used it for interest payments. She recommends just go bankrupt and keep your 401Ks.

    Well that’s a no-brainer. Unfortunately, most people don’t see a bankruptcy attorney early enough to know what to do, or what not to do.

  8. 8
    ray pepper says:

    Yes, I do know of many who have purchased because of this credit and will most certainly Buy if the 8k gets extended. This is solely not the only reason but another driving factor.

  9. 9
    Mark says:

    RE: Kary L. Krismer @ 7
    Yes Kary, it is a no brainer. But we’re talking real people here and there are quite a few that don’t have any brains.

  10. 10
    Scotsman says:

    New data on strategic defaulters. At least I think it’s new- no date.

    http://www.latimes.com/classified/realestate/news/la-fi-harney20-2009sep20,0,2560658.story

  11. 11
    mukoh says:

    My friends extended family did just this, they are in contract to close by the end of this month on a short sale, granted they got a great deal. 3000 Sq Ft Home for $315k South SnoCo. Thats pretty cheap. However these are the people that had banko 3 yrs ago, and do not appear to me to be the most responsible types. But hey they are bragging to him that it is a good deal for them.

  12. 12
    pegasus says:

    The $8000 tax credit program is yet another scam placed squarely upon the backs of the taxpayers to reward the broken system purveyors just as the cash for clunkers was. The cost per additional home sold amounts to about an additional $46,000 per home sold. Not a very effective program but a very expensive one.

    “NAR estimates that about 1.8 to 2.0 million first-time buyers will take advantage of the $8,000 tax credit this year, with approximately 350,000 additional sales that would not have taken place without the credit.”

  13. 13
    Mike2 says:

    By Kary L. Krismer @ 3:

    Rather unlikely that someone purchasing an 800k home would be a first time buyer. The people selling such a house would be more likely to be selling to someone, who sold to someone, who sold to someone who was a first time buyer.

    In the areas where the FHA limit is $729,950, it’s certainly possible. There was a story about a couple in LA that bought a home in the $750K range and took advantage of the $8K credit. An AGI of $150K works out to a gross income of over $200K if the buyer takes all available deductions. I doubt many of the people taking advantage of the credit fall into this category, but nothing prevents it.

  14. 14
    ray pepper says:

    RE: Scotsman @ 10

    I find this simply inexcusable and quite shocking! Who would have guessed it?

    psst……………….people are not stupid……………………..They are all coming back………..maybe not this year or next………………………but in the end they all come back……..

  15. 15
    Mike2 says:

    RE: strategic defaulters – at least we know the credit industry is working to identify them. Hopefully the outcome will be larger credit penalties for walk-aways. Now, a short sale only drops your credit score 120 points, and a foreclosure only about 350.

    Dropping strategic defaulters credit scores to 0 would certainly remove some of the incentive.

  16. 16
    Kary L. Krismer says:

    RE: Mike2 @ 13 – Which is why I used the term “unlikely” and not “impossible.” Most people in the market for an $800,000 home would have already owned a home before. Some might have stepped out of the market long enough that they’d qualify for the credit, but those are relatively rare.

  17. 17
    Scott Weitz says:

    RE: Mike2 @ 15

    HIghly disagree with penalizing poeople for looking out for themselves. Everyone has a different situation.

  18. 18
    Kary L. Krismer says:

    RE: Scott Weitz @ 17 – You have to penalize them. 0 is extreme, but there has to be a penalty for default regardless of the size of the loan, or the reason. You can then create exceptions, such as where the default was caused by a temporary disability.

    And there should also be exceptions the other way (penalizing them further), such as where the default is intentional, but that would be very difficult to determine. Rather than using the sudden termination of payments method used by those conducting worthless studies, I’d perhaps look for only the home loan going into default, and no other defaults. That would be a good sign of a strategic default, especially if they did have significant unsecured debt.

  19. 19
    Niz Monkey says:

    RE: Scott Weitz @ 17 – I agree with Kary. There has to be some sort of penalty. As a potential first-time homebuyer, I wouldn’t want to compete with strategic defaulters for houses in the future. Not having some sort of penalty for strategic default reduces the housing market to a poker room. When my luck runs out at the $50 minimum table, I will just pick up my chips and go play at the $20 minimum table. You are right that every situation is different, but then it gets tricky to sort those out.

  20. 20
    Mike2 says:

    By Scott Weitz @ 17:

    RE: Mike2 @ 15

    HIghly disagree with penalizing poeople for looking out for themselves. Everyone has a different situation.

    This isn’t just “people looking out for themselves”, it’s people not taking responsibility for their own poor decisions or the unplanned consequences.

    Do you really advocate a system where people buy things on credit and then decide “well, I’m not really happy with this car, boat, television, dinner, education, etc… so I’m not going to bother paying for it”?

    Adverse life events that affect ability to pay are another story. People deciding not to pay are acting in bad faith, which is far different from a borrower that breaks his leg and can’t work.

    Credit scores are meant to predict whether people will pay a debt. Ruthless defaults demonstrate otherwise, and scoring should reflect this.

  21. 21

    I’ve had borrowers break down in tears crying in my office when they learn that they can’t buy a house prior to the $8k expiring due to qualifying issues… I’ve also had a few borrowers pissed off when they realize they never qualified for the credit because they made too much money in our government’s eyes.

    I don’t think anyone should buy a home just because of the tax credit.

  22. 22
    deprogram says:

    By Rhonda Porter @ 21:

    I’ve had borrowers break down in tears crying in my office when they learn that they can’t buy a house prior to the $8k expiring due to qualifying issues… I’ve also had a few borrowers pissed off when they realize they never qualified for the credit because they made too much money in our government’s eyes.

    I don’t think anyone should buy a home just because of the tax credit.

    But people are, aren’t they?

    I can’t wait for it to expire, and in the market segment I’m looking at, the 8k is 4% of the purchase price. The credit has totally skewed the market at the bottom end. I’m actually seeing new listings coming on with an asking price greater than 2008 tax valuations. Are these people serious?

    The sooner it expires, and housing can correct in a [more] rational market, the better. I know I qualify for the credit. I just don’t care.

  23. 23
    Dogggis says:

    Just my 2 cents. The $8,000 certainly was a factor in purchasing my first home last month. We moved here to Seattle as the boom was still booming in 2006 and were almost caught up in the frenzy of buying a home. Instead, we rented for 3 years and waited for the market to come down and continued to save for our down payment. We bought the home for 30% lower than the 2005 sale price (foreclosure obviously). But we’re also on the lower end of the spectrum (260k sale price) and in Southeast KingCo. So we used the 8k to have it completely repainted inside and have all the carpet replaced (which in need badly). I think of the 8k as tax money that I’m getting back that I have paid the last several years.

  24. 24
    Stephanie says:

    Hello everyone! The 8k tax credit has been quite an issue lately. I have seen people get mad that they do not qualify or simply bought a year ago and now do not reap the rewards of the 8k and no pay back (2008 purchases have to repay the credit). Here is the thing, nobody really knew this tax credit was coming and to be honest it was a tricky way to get consumers to purchase homes. My husband and I bought our home this year (2009) in Sept. we were fortunate to get a short sale (which was really nice because we now have 60k in equity). We feel like we found the perfect house. Everything we wanted and the house has been completely remodeled at no expense to us plus we get the 8k to furnish the home. So we are well pleased!

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