Reacting to the economic success of its first-time home buyer's tax credit, the Senate is moving to expand and extend the tax credit into 2010. That is exceptionally good news for the consumer given the boost that these tax credits give to the overall economy at the level of the small business. A nudge to your representative would still be a good idea to ensure that this happens as announced.
According to RIS Media, the following information has been released:
The Senate has reached a compromise on extending and expanding the $8,000 tax credit for first-time home buyers, a boost the housing industry believes will help it pull out of its two-year-old downturn.
While its passage remains uncertain, the agreement would extend the existing credit for first-time homebuyers, worth up to $8,000, while offering a new credit of up to $6,500 for some existing homeowners, Senate aides said. The reduced credit would be available to all homebuyers who have been in their current residence for a consecutive five-year period in the past eight years. Lawmakers in Washington also raised the qualifying income limits to $125,000 for single taxpayers and $250,000 for joint taxpayers, from the current $75,000 and $150,000, housing-industry sources said. Under the Senate compromise, buyers must have sales agreements in hand by April 30, but they will have until June 30 to go to settlement, said the sources. The measure still faces votes in the full Senate and the House.
Read more: http://rismedia.com/2009-10-29/breaking-news-senate-plans-to-extend-and-expand-tax-credit/#ixzz0VQfaneNA
Friday, October 30, 2009
Positive Economics of Home Buyers Tax Credit Elude the General Public
Based on the negative reactions of many online readers to the potential extension or expansion of the tax credit for home purchases, it is clear that the average consumer does not understand the positive impact of tax credits versus the negative impacts of taxation and give-away stimulus funds. There is a perception that Realtors want the tax credit to continue in order to increase commissions and artificially raise home prices that have plummeted in recent years.
I can't deny that right now I'm working 4 jobs to pay my mortgage and would love to have a more robust real estate market, but the basic economics are that what is good for me personally in the housing market is exponentially better for the overall economy.
A tax credit keeps money in the consumer pocket which allows him or her to make decisions about spending or investment without govenment interference. When that money is spent or invested, it creates income for another consumer who then is part of a tax base that is larger and stronger and returns funds in the form of income taxes to the government far in excess of those funds lost in the original tax credit.
The rules and regulations for appraisals and lending have gotten so stringent that many of my good clients can't begin to qualify for loans and if they do have a contract on a home, the appraiser can make it null and void with an overly conservative appraisal. So much for free wheeling home sales to unqualified buyers due to an extended tax credit and artificially stabilized home values.
Jobs and the economy will rebound when people can freely buy and sell their homes in response to requirements to move for jobs, illness, retirement or changes in family situations and when the disaster of millions of foreclosures ends. Get on board to ensure that our representative do the right thing on this proposed measure and approve the home buyers tax credit extension.
I can't deny that right now I'm working 4 jobs to pay my mortgage and would love to have a more robust real estate market, but the basic economics are that what is good for me personally in the housing market is exponentially better for the overall economy.
A tax credit keeps money in the consumer pocket which allows him or her to make decisions about spending or investment without govenment interference. When that money is spent or invested, it creates income for another consumer who then is part of a tax base that is larger and stronger and returns funds in the form of income taxes to the government far in excess of those funds lost in the original tax credit.
The rules and regulations for appraisals and lending have gotten so stringent that many of my good clients can't begin to qualify for loans and if they do have a contract on a home, the appraiser can make it null and void with an overly conservative appraisal. So much for free wheeling home sales to unqualified buyers due to an extended tax credit and artificially stabilized home values.
Jobs and the economy will rebound when people can freely buy and sell their homes in response to requirements to move for jobs, illness, retirement or changes in family situations and when the disaster of millions of foreclosures ends. Get on board to ensure that our representative do the right thing on this proposed measure and approve the home buyers tax credit extension.
Thursday, October 29, 2009
The Way to Sell More Cars is to Sell More Houses
Just a year ago I visited my local GM car dealer and asked how sales were going. He answered by asking me how home sales were in the county. When I shook my head and told him I was taking a second job to make ends meet he nodded in empathy. Then he made a pronouncement that opened my eyes to the full impact of the downturn in home sales, "When you sell houses, I sell cars."
Our government missed the target with auto manufacturing bailouts and bank bailouts and stimulus packages that directed money to CEO's and big business whike ignoring the average consumer. Cash for Clunkers was a clunker, but the tax incentive for first time home buyers was a clear cut economic winner. Teh economy responds to incentives that stimulate normal cash flow in communities across the nation and keep the wealth of our country in the hands of hard working small business men and woman.
How can homes sales accomplish so much? Why was my friend so accurate in his assessment that he would sell cars when I sold houses? I call it free-flow economics or "I make it, I spend it, you make it, you spend it economics."
Consider Pete and Sally who despite the economy have good, stable jobs. Newly married, they want to buy a home but have been too busy to look for one. Enter Uncle Sam offering an enticing tax credit of $8,000 if they will go out and purchase their first home. Astute money managers, they see the personal financial value of this offer and they are soon the delighted owners of a home with $8,000 in their pockets to use as they choose.
In the 60 days that it takes to look for a home, put one under contract, close, move in and make it their own, a literal cascade of money flows through and around Pete and Sally. The Realtor who showed the home and the one that listed it, their real estate companies, the Sellers who bought another home, the inspector, the handyman, electrician, plumber and carpenter who made repairs, the appraiser and the lender, the insurance company, the septic cleaning company and the attorneys all share in the cash flow, and that is before the home closes. After closing it's the moving company, landscaper, painter, flooring company, tile man, home decorator, furniture store, fabric company, appliance store, grocer, department store and finally...the car dealer!
The car dealer? Why the car dealer?
There is a basic fact in my theory that bears repeating, I make money, I spend money, you make money, you spend money. Following this economic rule, I have a job, I spend my income on my new house. You help me in one or more facets of my home ownership and you make money. When average workers make money from that house sale, eventually somebody or perhaps everybody has the money to buy a new car or truck with that income. Voila! The sale of a house produces the sale of a car!
Free flow economics. Allowing the American working man or woman to keep more of their own income through tax cuts or tax incentives allows them to make choices in the use of their money that have immediate and direct benefits in the community. The bailout of GM caused my dealer friend to scale back his inventory and lay off workers. Billions of taxpayer money wasted. The first time homebuyers tax incentive has spurred the sale of many homes in our small town at no cost to the taxpayer and cars are being sold again.
Contact your Senator and Congressman and ask them to support a continued tax incentive for homes sales. We all benefit!
Our government missed the target with auto manufacturing bailouts and bank bailouts and stimulus packages that directed money to CEO's and big business whike ignoring the average consumer. Cash for Clunkers was a clunker, but the tax incentive for first time home buyers was a clear cut economic winner. Teh economy responds to incentives that stimulate normal cash flow in communities across the nation and keep the wealth of our country in the hands of hard working small business men and woman.
How can homes sales accomplish so much? Why was my friend so accurate in his assessment that he would sell cars when I sold houses? I call it free-flow economics or "I make it, I spend it, you make it, you spend it economics."
Consider Pete and Sally who despite the economy have good, stable jobs. Newly married, they want to buy a home but have been too busy to look for one. Enter Uncle Sam offering an enticing tax credit of $8,000 if they will go out and purchase their first home. Astute money managers, they see the personal financial value of this offer and they are soon the delighted owners of a home with $8,000 in their pockets to use as they choose.
In the 60 days that it takes to look for a home, put one under contract, close, move in and make it their own, a literal cascade of money flows through and around Pete and Sally. The Realtor who showed the home and the one that listed it, their real estate companies, the Sellers who bought another home, the inspector, the handyman, electrician, plumber and carpenter who made repairs, the appraiser and the lender, the insurance company, the septic cleaning company and the attorneys all share in the cash flow, and that is before the home closes. After closing it's the moving company, landscaper, painter, flooring company, tile man, home decorator, furniture store, fabric company, appliance store, grocer, department store and finally...the car dealer!
The car dealer? Why the car dealer?
There is a basic fact in my theory that bears repeating, I make money, I spend money, you make money, you spend money. Following this economic rule, I have a job, I spend my income on my new house. You help me in one or more facets of my home ownership and you make money. When average workers make money from that house sale, eventually somebody or perhaps everybody has the money to buy a new car or truck with that income. Voila! The sale of a house produces the sale of a car!
Free flow economics. Allowing the American working man or woman to keep more of their own income through tax cuts or tax incentives allows them to make choices in the use of their money that have immediate and direct benefits in the community. The bailout of GM caused my dealer friend to scale back his inventory and lay off workers. Billions of taxpayer money wasted. The first time homebuyers tax incentive has spurred the sale of many homes in our small town at no cost to the taxpayer and cars are being sold again.
Contact your Senator and Congressman and ask them to support a continued tax incentive for homes sales. We all benefit!
Fair Negotiations
I've always prided myself on being a Pit Bull negotiator on behalf of my real estate clients. I'm there to represent them and get the best deal. The consequences for the other party are not my responsibility as long as we act within the limits of the law and Realtor Code of Ethics.
Yesterday a client's son reminded me that I'm really better than that - I am a Pit Bull negotiator to get the best deal for everyone involved. In finding ways to serve every one's interests, my client is served best. I thank him for the insight he provided about how I conduct myself as a professional Realtor. It was refreshingly positive, especially in light of a difficult negotiation that had just been successfully concluded.
His actual comment was that most Realtors are like used car salesmen, pushy and ready to do anything to make the sale and money for themselves, but that I was clearly working to make a sale that would meet the goals and needs of everyone involved. His attorney girlfriend quickly stepped in to defend Realtors by noting that there are good and bad Realtors just as there are good and bad practitioners of every profession. (Well said by an attorney who has probably heard more than her share of negative lawyer jokes.)
As a Realtor I am committed to seeking the advantage for my Buyer or Seller. In this real estate market that often means selling, although the price is well below what was expected, or buying at a price that is a bargain even by today's falling values. In the big picture the overall goals are to meet my client's needs and in doing that to fulfill the need of another real estate client. Negotiating a contract through to closing brings far more personal satisfaction than a paycheck can ever provide.
Yesterday a client's son reminded me that I'm really better than that - I am a Pit Bull negotiator to get the best deal for everyone involved. In finding ways to serve every one's interests, my client is served best. I thank him for the insight he provided about how I conduct myself as a professional Realtor. It was refreshingly positive, especially in light of a difficult negotiation that had just been successfully concluded.
His actual comment was that most Realtors are like used car salesmen, pushy and ready to do anything to make the sale and money for themselves, but that I was clearly working to make a sale that would meet the goals and needs of everyone involved. His attorney girlfriend quickly stepped in to defend Realtors by noting that there are good and bad Realtors just as there are good and bad practitioners of every profession. (Well said by an attorney who has probably heard more than her share of negative lawyer jokes.)
As a Realtor I am committed to seeking the advantage for my Buyer or Seller. In this real estate market that often means selling, although the price is well below what was expected, or buying at a price that is a bargain even by today's falling values. In the big picture the overall goals are to meet my client's needs and in doing that to fulfill the need of another real estate client. Negotiating a contract through to closing brings far more personal satisfaction than a paycheck can ever provide.
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