Since it was announced in late 2008, the $7,500 home-buyer tax credit has received mixed reviews, mostly because as it currently stands, it has to be fully repaid in 15 years. So basically, it’s an interest-free loan (not such a bad thing in itself), rather than a true tax credit.
It may or may not make it through House and Senate negotiations, but if it does, I’m pretty sure this would be an additional shot in the arm of the national real estate market, so stay tuned for updates.
Excess demand for houses is what got us into this mess. Encouraging demand will get us out?
Hi Ryan,
I do think $7,500 as part of a stimulus package that starts at the END of this one, would be good.
But to change the loan to a credit now would not stimulate anything. The people already bought the houses, so for the government to not get the money back as intended, would be like the government throwing money down the toilet.
It clearly can't "stimulate" more people to buy "last year" to do that. It's pretty much a stupid idea.
Now if they want to put it in place in April of 2009, when this package is up, I would support that.
To comment #1 I'd say, given the criteria to get a loan has gotten so much tighter, I don't think the stimulus is part of the problem. I do think it is an appropriate part of a solution.
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All great points, indeed. I agree that changing the current plan wouldn't do much to stimulate, and implementing a new program would be the way to go, if anything's going to be changed.
I don't really have a problem with stimulus programs that will encourage those who can qualify to buy, as long as we don't go back to the reckless lending practices of the past 5 years or so. We want to encourage buying in a fiscally-responsible manner.