time.com— Viewpoint: the $8,000 tax credit for first-time home buyers is set to expire soon.Many people want Congress to extend it, but there are strong reasons not to.
Sep 29, 2009View in Crawl 4
As a first time homebuyer whose $7500 is in the mail (purchase price was $75K so 10%), I vote keep it. Hear me out:A little background - I'm 25 and have been out of college for about 2 years, and at my current job for 1 1/2. I make an entry level salary and my paycheck after taxes isn't even 4 figures. I spent a year living with my parents and managed to save $10000. I bought a 2bed 2bath condo foreclosure in the NW burbs that was complete s**t...kitchen, bedrooms, living room were s**t, everything was s**t except the bathrooms. Pictures of the rehab:Living room: <a class="user" href="http://picasaweb.google.com/shawn.rana/Kitchen#5387114082344458370" rel="nofollow">http://picasaweb.google.com/shawn.rana/Kitchen#538 ...</a>Kitchen: <a class="user" href="http://picasaweb.google.com/lh/photo/_qgyE3x4yLwnAuA2UNor4w?feat=directlink" rel="nofollow">http://picasaweb.google.com/lh/photo/_qgyE3x4yLwnA ...</a>Long story short, I paid my closing costs and used the rest of the money to gut rehab the entire thing. Aside from the carpet, baseboards, patio door and cabinets everything was done by my friends and I. Once I get the tax credit in the mail it's going to pay my rehab loan and buy some furniture and laundry machines. I'll be living here for at least 3 years, as that's how long I have to hold it to keep the credit.Now, I don't expect you the taxpayer to be thrilled about financing my little home improvement project. But take a moment to consider all the other retarded s**t our gov't spends money on like invading third world countries and earmarking basket weaving classes in Ohio. All that money I spent went back into the economy and state/local governments. All's I'm saying is that giving a young guy a crack at homeownership isn't the worst gov't program out there.
For decades, increasing home ownership has been a popular theme among politicians simply because of the majestic idea that every American should own a home. One thing both parties did was make realestate a de facto tax haven; they did this by allowing capital gains to be exempted from taxation, as long as you reinvest the gains into more realestate in a certain time period. The democrats, during the 90s, accused many banks of being "racist" for not giving loans to minority groups and small business owners (aka... people with no credit). Thus, they set up bureaus to back loans for banks who lend to these high-risk groups; in some cases, like the Small Business Association, defaults were backed up to 85%. Thus, banks quickly realized they could make a profit, even with high default rates, simply because the federal government will back them. Furthermore, most of these lenders (like Allied Capital), sold these loans to major banks (Freddie Mac, Fannie Mae) who packaged them into bond-like securities for investors. Problem is, investors eventually found out their portfolio had an unknown amount of sub-prime realestate, and they panic. But the worst thing, by far, is the rising housing prices have increased so rapidly over decades that investors assumed the property values would be worth more even if the home owners default... leading to incredibly risky lending.The real irony... right now politicians are struggling to find ways to increase home prices once again. They see it as restoring wealth... I see it as inflating wealth that never really existed. People need to learn, homes are a liability... not an asset.
zacharytelschowSep 29, 2009
Yes.
peppermintpigSep 30, 2009
It continues to inflate the housing market and advances government debt, which ultimately harms the buying power of the FRN dollar.
papashawnSep 30, 2009
As a first time homebuyer whose $7500 is in the mail (purchase price was $75K so 10%), I vote keep it. Hear me out:A little background - I'm 25 and have been out of college for about 2 years, and at my current job for 1 1/2. I make an entry level salary and my paycheck after taxes isn't even 4 figures. I spent a year living with my parents and managed to save $10000. I bought a 2bed 2bath condo foreclosure in the NW burbs that was complete s**t...kitchen, bedrooms, living room were s**t, everything was s**t except the bathrooms. Pictures of the rehab:Living room: <a class="user" href="http://picasaweb.google.com/shawn.rana/Kitchen#5387114082344458370" rel="nofollow">http://picasaweb.google.com/shawn.rana/Kitchen#538 ...</a>Kitchen: <a class="user" href="http://picasaweb.google.com/lh/photo/_qgyE3x4yLwnAuA2UNor4w?feat=directlink" rel="nofollow">http://picasaweb.google.com/lh/photo/_qgyE3x4yLwnA ...</a>Long story short, I paid my closing costs and used the rest of the money to gut rehab the entire thing. Aside from the carpet, baseboards, patio door and cabinets everything was done by my friends and I. Once I get the tax credit in the mail it's going to pay my rehab loan and buy some furniture and laundry machines. I'll be living here for at least 3 years, as that's how long I have to hold it to keep the credit.Now, I don't expect you the taxpayer to be thrilled about financing my little home improvement project. But take a moment to consider all the other retarded s**t our gov't spends money on like invading third world countries and earmarking basket weaving classes in Ohio. All that money I spent went back into the economy and state/local governments. All's I'm saying is that giving a young guy a crack at homeownership isn't the worst gov't program out there.
Closed AccountSep 30, 2009
For decades, increasing home ownership has been a popular theme among politicians simply because of the majestic idea that every American should own a home. One thing both parties did was make realestate a de facto tax haven; they did this by allowing capital gains to be exempted from taxation, as long as you reinvest the gains into more realestate in a certain time period. The democrats, during the 90s, accused many banks of being "racist" for not giving loans to minority groups and small business owners (aka... people with no credit). Thus, they set up bureaus to back loans for banks who lend to these high-risk groups; in some cases, like the Small Business Association, defaults were backed up to 85%. Thus, banks quickly realized they could make a profit, even with high default rates, simply because the federal government will back them. Furthermore, most of these lenders (like Allied Capital), sold these loans to major banks (Freddie Mac, Fannie Mae) who packaged them into bond-like securities for investors. Problem is, investors eventually found out their portfolio had an unknown amount of sub-prime realestate, and they panic. But the worst thing, by far, is the rising housing prices have increased so rapidly over decades that investors assumed the property values would be worth more even if the home owners default... leading to incredibly risky lending.The real irony... right now politicians are struggling to find ways to increase home prices once again. They see it as restoring wealth... I see it as inflating wealth that never really existed. People need to learn, homes are a liability... not an asset.
jonlargeSep 30, 2009
and inflated home prices due to government interference was the root cause of this entire financial crisis