Here are some comments I made to a reporter doing a story for a National news outlet and I thought it was worthy of posting here for you to peruse and comment on so let me hear all of your thoughts!
As Broker/Owner of HQ Real Estate and Investment, LLC in Scottsdale, AZ and host of the number one wealth radio show Unlock Your Wealth Radio, there are a few sides to the tax credit expiration which creates challenges on all of those sides and I am happy it is going away.
For homebuyers, it seems like free money and a potential panacea providing access to the American Dream of homeownership. Many of these homebuyers who would be buyers later in the year or not really ready until next year are trying to cash in on the free money. As a result, the homebuyers who would be better prepared financially if they waited, are forced to decide between buying smaller properties now versus a larger or more luxurious property later. They may have to sacrifice on that nicer home they initially were willing to wait for or they are putting a burden on themselves financially to get into the nicer home and cash in on the $8,000. The very problem that precipitated our current marketplace was lack of discipline, impulse gratification and poor planning on the would-be homebuyer’s part. That looks like what we are doing all over again.
The tax credit is poaching future customers for today’s tax credit. For the real estate agent that means smaller sales price equals smaller commission and less customers later which creates income volatility for the real estate agent and their complimentary industry partners as well. The pundits have said “the poach” of future customers could be as high as 10%. That affects appraisers, home inspectors, title agents, escrow companies, mortgage originators, mortgage processors, moving companies and insurance companies to name a few.
The tax credit has income exclusions so those more likely to be able to afford sustainable homeownership are not eligible. It really seems kind of oxymoronic to me. In my not so humble opinion, we are doing the same thing with this tax credit as we did when we dropped the interest rates so low and loosened underwriting guidelines to the point that a homeless, jobless illegal alien could qualify for a mortgage. My answer may not be totally on task, but I look at things differently than most. The biggest question I have yet to see answered is, “Who on this planet figured out that it was a good idea to take taxpayer money we haven’t even collected yet and use it to incentivize the very people on the periphery of sustainable homeownership who put us in the exact position we are in today?”
Can you really solve a problem doing the same thing over that caused the problem?
