Now that we have so many stimulus packages in the Senate and House and all the costs that we as tax payers must pay what we as potential home buyers want to know is what is going to happen with the Home Buyer Tax Credit and how is it going to affect my decision to buy a home.
Currently the credit is set to $8,000 for a first time home buyer and $6,500 for buyers who are buying a new home and have been in their previous home for at least 5 years. So now one of the things we have to look at it is how much is this going to cost the average tax payer? To be honest it is really hard to say because one variable is needing to know how many people will decide to use this credit. One of the things we will have to do is look at some other statistics which may help us figuhre this out.
One of the first things to consider is how many homes will be sold in 2009? In 2008 we sold about 4 ½ million homes. We are about at that same number this year.
In most of 2009 the Home Buyers Tax Credit was only for first time home buyers and was only up to $8,000 which is 10% of the home value assuming that the home was at least $80,000. Now all of these homes were not $80,000 but let’s just say that they were.
Given that number and assuming that at least ½ of all the homes being purchased were new home buyers that qualified given that they did not exceed the income limits, which many did but for the sake of easy math for me we will say they all qualified.
A little bit of math gives us about $18 billion in 2009 for the tax credit that does not have to be paid back. Is that a lot of money? Yes it is but given all that money being passed around out there to stimulate the economy this is one of the best way to stimulate the economy.
At this moment I am sure that many fellow conservatives are screaming at me but please let me explain what happens to the economy when a home buyer purchases a new home as opposed to something that does not appreciate over time like a car.
We all know that foreclosures and short sales have been the vast majority of the market for at least 2 years and they are not in the best condition and therefore will need quite a bit of work like carpeting, appliances etc etc etc.
If you are not into this market and seen these homes your-self you could not possibility understand what we are talking about here. I am not just saying a small touch up here but full rehabilitation to make these homes truly habitable again.
Many normal home buyers cannot even qualify for these loans for the homes simply because of the condition they are in. What is so funny is how upset these people get when they see the short seller come in and “make all that money” off of short selling. However if it were not for these people many of these homes would never be sold, lenders will not sell a home without certain things like complete bathrooms and when the short seller comes in and fixes up this home without a loan either by means of personal cash or some other off beat source these homes provide jobs and a home that can be sold at a fair price. Too me there is nothing more American then that.
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