| Housing tax credit costing more than it help.
Posted: 10/27/2009 10:40:14 AM | "Approximately 1.9 million buyers are expected to receive the credit, but more than 85 percent of these would have bought a home without the credit. This suggests a price tax of about $15 billion – which is twice what Congress intended – for approximately 350,000 additional home sales. At $43,000 per new home sale, this is a very expensive subsidy . . ."
The linky; http://www.ritholtz.com/blog/2009/10/why-expanding-home-buyers-credit-is-a-mistake/
But think of it this way folks. We are learning the economics and math that our education system failed to teach us.  | |
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| Housing tax credit costing more than it help.
Posted: 10/27/2009 1:05:43 PM | | This tax credit is another social engineering stratagem. If home ownership improves communities, why not let the voters in each state decide how much that's worth to them? I don't know what justifies a national subsidy, and as you suggest, it distorts the housing market. It makes about as much sense as the national subsidy of marriage. I'm sure the desire to get that same tax break is one reason gays want the right to marry each other. | |
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| Housing tax credit costing more than it help.
Posted: 10/27/2009 2:22:12 PM | Not to be ignored is the political calculation, if 1 out of three of the loaners defaults in anger and shame, the Dems will still have picked up two voters who will love them forever saying 'were it not for them, I'd be a renter". Of course we are the payers of both the success and failed loans, and impotently wonder who we should vote for in the next election?
is there any doubt those who receive are crooks, those who sanction loans are thieves, and those who commend the practice willing accomplices to theft? | |
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| Housing tax credit costing more than it help.
Posted: 10/27/2009 3:16:17 PM | I wonder how long before the sheeple pick up on this. You can imagine that this kind of "help" will go on for the foreseeable future.
I guess they are either trying slow this down and make it not so spectacular. We gotta prepare for the 2010 election, ya know. Or they truly think they can turn this around.
Hmmm.....the '10 election is in November. We might need to bump that tax credit up to $30k. By November the Alt-A loans will be defaulting in full force. Jobs will probably not be recovering by then. Better bump it up to a $45k tax credit. Of course we have to account for the fact that there will be those fence sitters waiting for ever higher tax credits. Better make it $60k. Hmmmm....how bout cash back on 0% financing?
This could be fun. How bout we start making a betting pool on what kind nutty, long-term-future-killing incentives the powers that be will come up with next? | |
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| Housing tax credit costing more than it help.
Posted: 10/27/2009 4:37:04 PM | | Testing testing...ignore this post.................................................................................................................................................................................................................. | |
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| Housing tax credit costing more than it help.
Posted: 10/27/2009 6:17:45 PM | | Ok sorry for the hijack here but I can't start a thread, I can't post more than 5 times a day. I have to wrote a tome or some other nothingness fluff to make a post instead of just a thought and wtf is this crap? Am I the only one dealing with this? | |
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| Housing tax credit costing more than it help.
Posted: 11/5/2009 7:09:09 AM | The FHA is making ominuous rumblings this morning. From what I've gathered so far:
1. 13.7% of their outstanding loans are past due, and worsening.
2. they expect to need a government loan of $50-60 billion within 3 years
3. They are actively making loans at 3.5% DP (to deadbeats, my words)
4. They have fallen well below minimum mandated by their charter (see #1 and 2)
I can't wait til these gomers run healthcare. | |
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| Housing tax credit costing more than it help.
Posted: 11/5/2009 12:53:53 PM | While waiting for an appointment the tv set in the waiting area was on and there was a show on HGTV called My First Place were a person or couple were looking for their first place to buy. The show was done this year (2009), and it boggled my mind how many of these folks didn't have any money to put down, but were doing 1,2 or even 3 loans with a combined interest rate of 18%. None were buying smaller homes that would have a smaller monthly payment, none seemed to even grasp the idea of living below ones means. None had saved money to put down a good down payment.
When we bought our small home in '77 with an FHA loan, we put down 2k, and the home was 18k. It was a home we could afford without suffering financially. Nowadays we seem to have a majority of young adults who want the biggest home, who assume they will never lose their job, lose medical insurance or have some other crisis, and thus not be able to make the mortgage payment. We need to get back to teaching people about living below their means!!!
And we need to stop allowing homes to be bought with no down payment and multiple loans. Seems some people think because the home sold for 200k that this is what it will cost them. Yet they forget the loan interest, as well as tax and insurance. One couple was shocked when all the expenses were included and asked why was it so high since the house sold for 200k.
Doesn't anyone know basic math anymore?
~Beth~ | |
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| Housing tax credit costing more than it help.
Posted: 11/5/2009 12:54:47 PM |
All joking aside. What's to ignore from the original link? Have you read the link?
Well, for one, the article doesn't say where the "$43,000" figure comes from. The math of the article comes from Ted Gayer, a former Bush Administration economics adviser. Gayer's one of the guys who got us into this economic mess in the first place. Why should we listen to him?  | |
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| Housing tax credit costing more than it help.
Posted: 11/5/2009 3:15:40 PM | | Because I back up what I say with reliable sources, instead of unsubstantiated garbage from George W. Bush's former cronies. You should try it once in a while. | |
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| Housing tax credit costing more than it help.
Posted: 11/5/2009 3:30:23 PM | | If Ted Gayer actually came out and discussed the methodology with which he arrived at the $43,000 figure, I'd be glad to listen. He hasn't. He just threw out this number seemingly from nowhere. He helped the Bush administration ruin the economy, and now he's trying to stop the reforms that will undo some of the damage the idiocy of him, the Bush administration and the people who voted them in caused in the first place. | |
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| Housing tax credit costing more than it help.
Posted: 11/5/2009 10:55:46 PM | About all I know about Ted Gayer is what I have read in publications like Reason, National Review, The New Republic and that one person says the Brookings Institute he has worked with is liberal and another says they are conservative.
Which just goes to show that both parties have been screw ups.
~Beth~ | |
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| Housing tax credit costing more than it help.
Posted: 11/6/2009 10:51:14 AM | You've used it, and often. (Try Message 43 in the "Do you like the USA" thread for starts)
Trumps that "I don't lie to my kid" thread you've been posting to huh?
Go ahead, use your brilliant "she's ugly" post so that we can all see your cards again. | |
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| Housing tax credit costing more than it help.
Posted: 11/6/2009 11:44:12 AM | http://www.irs.gov/newsroom/article/0,,id=186831,00.html
http://www.housingcrisis.com/tag/calculated-risk/
The NAR recently reported:
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.
You can calculate the new $15 billion projection; 1.9 million times $8,000.
But this only resulted in 350,000 additional sales. Divide $15 billion by 350 thousand, and the program cost is about $43,000 per additional buyer. Very expensive.
Now the National Association of Home Builders estimates that expanding and extending the credit through 2010 would generate 500,000 additional sales at a cost of about $30 billion. So this is approximately $60,000 per additional house sold. And I think the cost will be much higher. | |
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| Housing tax credit costing more than it help.
Posted: 11/7/2009 1:30:38 PM | Silly boy. That SAME link explains why the $43,000 estimate is incorrect:
Beck got his number from someone who learned about a guesstimate of what the auction value of permits might be (way higher than current estimates, by the way), divided by the number of households, and proclaimed this the cost of the bill. In effect, he looked at a guess about the size of the blue rectangle, which does not represent an economic cost, and called that the cost to the economy.
In a way, though, what Martin Feldstein did was worse. He took the CBO’s estimate of “compliance costs”, which was $1600 per household in an early report (it’s now down to $900, but who’s counting?), and implied that this was the economic cost of the legislation. But “compliance costs” are basically the sum of the blue rectangle and the red triangle; the true economic costs are just the triangle, and are much smaller.
Another way to say this is that under the Feldstein method, any time you try to correct an externality, which necessarily means changing relative prices, all of the negative effects of the price change will be counted as a cost — but none of the positive effects will be counted as a benefit.
Bad stuff. And what you should bear in mind is that all I’m doing here is conventional neoclassical economics, quite literally basic textbook material. What does it say when the people who claim to believe in this stuff throw it out the window as soon as it leads to policy conclusions they don’t like?
Basically, the premise of this topic is stupid and wrong. That $43,000 number is a complete sham. | |
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| Housing tax credit costing more than it help.
Posted: 11/8/2009 9:56:25 AM | fzr --^^ so what do they do -- they extend the tax credit (and even open it up further potentially to investors at a lessor amount of 6,500).
We can choose to laugh or cry when watching gov. in action.
(I choose to laugh personally).
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