The Future of the First-Time Homebuyers Credit

October 27, 2009 · Posted in Closing in your Investment Deal · Comments Off 

Multiple Bills
As I mentioned before, there are already nearly half a dozen bills being considered by Congress. The most popular bill simply extends the current credit’s deadline from November 30th, 2009 to May 30th, 2010. However, there are other variations that would expand the credit even further. One seeks to raise the value of the credit from $8,000 to $15,000 while others would change the credit so that all homebuyers, as opposed to just those who have not purchased a house within the past three years, can take advantage of it.

Economy Still in Trouble
The main reason that supporters want to extend the bill is simple: the economy is still in trouble. Without a tax incentive, U.S. home sales will drop in 2010. Specifically, many are worried that sales during the winter months (when real estate activity is typically low) will plummet and put our economy back into trouble. Senator Isakson from Georgia, who actually worked in real estate before running for office claims “December through February is historically the worst time for home sales anyway because of the winter months, so with the credit ending November 30, you have a double whammy.”

Popular Credit
In all honestly, one of the largest reasons Congress is considering extending the credit is because of its mass popularity. Politicians are always thinking about their next reelection, and supporting legislation that is popular among your constituents is a great way to get reelected. Average taxpayers are always claiming that Congress does not do enough for “main street Americans” extending or expanding the current credit would be a great way to please them.

Opposition
There is quite a bit of opposition to extending the credit. First and foremost, there is concern over its costs. The first credit was passed in a state of economic emergency. Americans were frightened that the banking system would collapse, and that the housing marketing would crash entirely. Therefore, Congress was able to get the credit created without much debate about the costs. However, when you look at the math, this credit has already been very expensive. If 1.4 million families have already taken advantage of the credit, and 400,000 more will before it expires, then we are looking at a total cost of nearly $15 billion. Additionally, experts are worried that excessive credits will be the first step in creating the next real estate bubble.

Industry Pressure
Another thing to consider when examining the housing credit is the amount of pressure real estate and construction lobbyists have put on Congress. The National Association of Home Builders, The National Association of Realtors, and even the Business Roundtable (an association of chief executives) have all published statements promoting an extension of the credit. They are also pushing for lower interest rates, and an extension of the limits on loans eligible for government backing or purchase

Likelihood of Extension
With all of this debate about whether the credit has worked or not, what exactly are the odds that the credit will be extending? Lisa Poole of Time Magazine says there is a 2 to 1 chance that it will be either extended or expanding, but I would say that the odds are probably better than that. I doubt that it will be increased to $15,000, but I am pretty confident we will see some type of extension on the $8,000 credit for first time homebuyers.

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How To Build Wealth In A Down Economy Or Recession

March 29, 2009 · Posted in Finding Loans or Investors · Comments Off 

Based off of my experiance in a personal recession… going from 116,000 in debt to paying off 70,000+ and making 250,000 in 2 and a half years….

With economic times not where we want them to be today, the bottom line is how do you survive? Do you suddenly have to tighten your budget and deal with increased stress? Is it possible that you could get laid off tomorrow, if so then what? Can you truly plan a family vacation for the summer not knowing what will happen next? People always ask are we really in a recession? It is my profound belief that if you are not better off right now then you where last year, that you are in an economic recession.

So the question remains, if things are slowing down in the economy what should you do next? In my experience I’ve learned there are only 3 viable ways to truly ensure that you can beat out the economy. First, have 100’s of thousands of dollars stashed away to basically buy your time through the slow periods. Read more

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