Is there seriously more talk of another tax credit? Please… the last ones only prolonged the inevitable and ultimately dug our hole deeper. The previous tax credits cost the American Tax Payers, which are mostly middle income earners, $23.5 Billion! Out of the 1.8 Million home buyers that took advantage of the first program, 950,000 bought back in 2009 when the $6500 tax credit was in play. If you bought during that time, and was considered a “first time home buyer”, then remember that you have to pay that money back. The IRS designated that $500 per year to be paid back over a 13 year term. It was basically a free loan.
Now that the tax credits are over, we have a $23.5 Billion bill and the headache gets worse. Existing home sales are down considerably and we are heading into our typical slow period of long Winter months. Job growth is nothing where it should be and consumers are not confident with the track that we are on. As states continue to threaten to cut the budget; that specifically hurts markets like ours where many of our residents are state workers. So, take your ibuprofen and drink lots of water because the headache continues.
We are entering into the middle of Summer even though we haven’t had much of a Summer thus far in the Pacific Northwest. We finally are receiving some nice weather and people are taking advantage of that. Sales are slumping a little since the tax credit has been ceased. Although, we are getting reports of increased fraud. You would think that the IRS would require a purchase contract to be submitted, along with the HUD 1, since they instituted the April 30th deadline to be under contract with a seller. Well, they apparently don’t have any policies in place to verify that and buyers are going into contract after the April 30th deadline and still receiving the tax credit. As a tax payer, how does that make you feel? Hopefully they can get that under control soon and start thinking a few steps ahead.