Program extension to help housing market / LJWorld.com

Archive for Monday, November 2, 2009

November 2, 2009

An $8,000 tax credit continues to spur area residents to shop for and buy their first homes.

And they’re about to get some company.

This week, federal lawmakers are expected to sign off on the extension of a program that gives first-time homebuyers the $8,000 tax credit — a program that started Jan. 1 and continues through Nov. 30. The extension is expected to give buyers until April 30 to have a house under contract, then another 60 days to close.

New with the extension are plans to offer a $6,500 tax credit to a whole new set of homebuyers: People who meet certain income limits and have been in their homes for five of the past eight years.

Both decisions — the extension and the expansion — can’t come soon enough for Mike McGrew, CEO of McGrew Real Estate in Lawrence and chairman of the Federal Taxation Committee for the National Association of Realtors.

“We’ve had several decades of uninterrupted, steady increases in the Lawrence real estate market, both in volume of sales and values of properties, but lately we’ve seen declines in both of these,” McGrew said. “We think the first-time homebuyers tax credit has helped stem that decline, and we think this (expanded) program will help even more.”

While data from specific communities is unavailable, the National Association of Realtors has compiled estimates regarding the effect of the tax credit program in Kansas. In all, the association said, 22,900 first-time buyers will have been able to take advantage of the credit as of Nov. 30.

Of those eligible, the association said, about 1,500 would not have been in the market at all without the credit.

“We know that it has gotten people off the fence,” McGrew said.

That’s why McGrew was part of a team that recently traveled to Washington, D.C., to lobby lawmakers to extend and expand the program. McGrew’s appointments included a stop by the office of Sen. Pat Roberts, R-Kan., who is a member of the Senate Finance Committee.

The committee has since “blessed the concept” of continuing and expanding the program, McGrew said, and approval remains tied up in procedural issues.

“With Congress, things could change in five minutes,” McGrew said. “But the plan is it will drop (today), and the House has indicated a willingness to go along and do this on a very quick basis.

“The stars are still aligned, and it should work out for us.”

The credit is a dollar-for-dollar savings on federal taxes. If a taxpayer owed the government $4,000, for example, the credit would allow the taxpayer to erase that debt and then receive a $4,000 check from Uncle Sam.

One Lawrence homebuyer closed on his first home, then filed an amended tax return and had his $8,000 back within 30 days, McGrew said.

Expect more of the same — and more — once the program is both extended and expanded, McGrew said.

“It will be helpful,” he said. “It has been helpful, and this will be more helpful.”

Discussion

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2 November 2009
at 6:30 a.m.

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JackRipper (Anonymous) says…

its great all those free market developers and real estate people can only exist and thrive because of government intervention. suppose it wouldn't make sense to evaluate the kind of growth we are supporting considering peak oil could leave us looking back and kicking ourselves for contributing to sprawl and bedroom communities when it is time to rethink it.
2 November 2009
at 6:48 a.m.

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devobrun (Anonymous) says…

Jack, real estate developers, energy moguls, automotive executives and money lenders live in a world of profit.
Profit and more profit. They must grow their profit.

Trivial things like free markets are for theoreticians.

These guys play the game, whatever the game is. Their job is to scam the system. It doesn't matter what the system is.

Today the system is government meddling in markets. If the home buyer can afford the new house, then the home buyer should pull in their belt for a year or so and save the $8k for the real estate.
Not in Barney Frank's world. Therefore, savings are not required in Mr. McGrew's world either.

Government in markets. Government in business. Government in energy efficiency. Government, government, government. Don't blame McGrew, he's just playing the game. Blame the federal legislature and their need to control everything.
2 November 2009
at 6:50 a.m.

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monkeyhawk (Anonymous) says…

“Of those eligible, the association said, about 1,500 would not have been in the market at all without the credit.”

What does that statement tell you? Here we go again ….

Considering a 4 year-old girl got a credit, as did a yet-to-be determined number of illegals and even some IRS agents, one would not be too comfortable about this program.
http://www.sun-sentinel.com/business/…

“It has been estimated that the actual cost of each $8,000 credit is really $43,000 cost to the government, because most of the 2,000,000 plus home buyers expected to claim the credit would have bought anyway. That number surely rises with the cost of investigating more than 100,000 of those claims, and rises even more when 167 of those claims are criminal investigations.”
http://www.huliq.com/8684/87865/fraud…
2 November 2009
at 6:56 a.m.

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JackRipper (Anonymous) says…

devobrun how did we get the government we have now? who has the clout to get these things done. why the very fact mcgrew is acting like a lobbyiest pretty much answers my question.
2 November 2009
at 7:31 a.m.

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JackRipper (Anonymous) says…

and on top of it when did it become the business of government to determine that house ownership and now the house as a short term quick rich game to be so noble? right now the renter is screwed simply because the government let's people right off part of their housing expense by writing off the interest, this on something that most likely will appreciate. who is behind the government determining the winners and losers in this issue?
2 November 2009
at 12:29 p.m.

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Jimo (Anonymous) says…

I'd be more inclined if this was (a) limited to “new” buyers, (b) limited only to newly constructed homes, seeing that sales of existing homes do not stimulate anything, (c) was paid for by cutting back the top income limits on the massive mortgage interest subsidy, (d) required at least 10% down and (e) wasn't a refundable credit, since if you don't have enough income to pay $8k in taxes then you probably shouldn't be buying a house.
2 November 2009
at 7:26 p.m.

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toe (Anonymous) says…

Do not buy a house during this government program. The houses will be artificially inflated until the program ends.

3 November 2009
at 3:41 p.m.

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jafs (Anonymous) says…

Unless houses aren't selling at the current prices.

Then if they inflated them for the credit, they'd be selling for the same amount (or rather, not selling).