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!