First time home buyer credit bad for the economy?
24 April 2009 3 Comments
Real estate isn’t really what this blog is about, but it comes up somewhat regularly in relationship to my keen interest in both residential building design and community planning. And, as regular readers will note, my wife and I have recently been thinking of selling our home and buying another.
NPR’s Morning Edition made note today of the $8,000 tax credit Uncle Sam is offering to first-time home buyers. I’m not a first time buyer and, thus, haven’t given much thought to the offer. Quite a few people have though. According to the NPR spot, lower housing costs combined with the tax break have resulted in an upward trend among first-time buyers.
My office acquaintance who just bought a home — from the utterly inane and incompetent bureaucracy that remains of Countrywide — has brought it up in our conversations. For him it was an incentive; from what I can tell it wasn’t the deciding factor. He and his wife have been looking at houses for a while. On Monday, a friend noted over breakfast that he knows of two people planning to buy a house solely because of the tax credit, people who in his opinion have no business buying a home. I trust this friend’s judgment; he’s a financial counselor, in essence, for Dave Ramsey’s Financial Peace program.
Could this be an unintended consequence of the stimulus, something the Obama administration failed to foresee? Will we end up with an entirely new set of individuals chained to mortgages they can’t afford, starting the vicious cycle over again — thanks to the federal government? The danger is real, although I hope it isn’t the case.
The Morning Edition spot pointed out that first time buyers’ ideas of what constitutes a starter home are less opulent than a few years ago. Wine cellars and the like have given way to practicality. “Peace of mind is the new must-have,” according to NPR.