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Government Hearts Homeowners

There's a pretty good chance that I'll be eligible for the first-time homebuyer tax credit this year, which is nice for me. Budget wonk Pete Davis, however, thinks it's bad for everyone else. Which seems to be how most tax policy functions when it comes to housing.

By Ezra Klein  |  September 18, 2009; 12:03 PM ET
Categories:  Taxes  
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Comments

You like free money?

Posted by: kingstu01 | September 18, 2009 12:17 PM | Report abuse

I don't know about Erza, but I love free money.

Posted by: obrier2 | September 18, 2009 12:22 PM | Report abuse

I think you mean "free" money.

Posted by: slantedview | September 18, 2009 12:24 PM | Report abuse

These schemes are just cocaine for the bourgeoisie. Meanwhile the sober people should be thinking about how to make this country better.

Posted by: bmull | September 18, 2009 12:53 PM | Report abuse

What a great deal, hopefully the Realtors get their way and it goes up to $15K!! I've never owned a home, this might get me off the fence here.

Posted by: zeppelin003 | September 18, 2009 12:54 PM | Report abuse

Why does the blog sometimes repeat the last word on a line? I hope WaPo didn't pay much for the software.

Posted by: bmull | September 18, 2009 12:55 PM | Report abuse

There's also compelling evidence that the $8k just gets absorbed into the market and prices rise to suck it up, at least in the lower priced homes where the buyers are more likely to need assistance. [http://activerain.com/blogsview/1207279/sellers-market-demolishes-first-time-home-buyer-credit ]

So it's possible the only people who are helped by this are folks trying to sell a house who might be underwater or close to it. Which is fine, I think, as a payoff to our economy, but it's not much help to buyers.

Posted by: DonWhiteside | September 18, 2009 1:01 PM | Report abuse

As DonWhiteside sez: there's good evidence that selling prices are being jacked higher to counteract the cash credit. People just think its a good deal.

But the bigger picture is that, aside from foreclosure housing in the lowest price categories ($<150K) housing still has further to fall in the next couple years. Option ARMs, Interest Only Loans, etc. are yet to nuke the middle and upper tiers of housing prices.

Ezra: don't be tempted - don't buy a house. If you want a house rather than an apt., rent it. Underwater on the mortgage is just an awful way to go through life. Besides that, the DC metro area housing prices are way out of kilter since so much is dependent on government employees, government contractors, lobbyists, and law and PR firms doing biz with any of the above. When budget reduction becomes necessary to save the dollar in international markets, government will not grow and may reduce.

Read calculatedriskblog.com more often!

Posted by: JimPortlandOR | September 18, 2009 1:59 PM | Report abuse

Ezra,

don't listen to Jim. Buy a house if you can afford it. Just don't get a second, third and fourth mortgage to pay for frivilous crap that you don't need. If you can afford it, buy all the frivilous crap you want.

Posted by: visionbrkr | September 18, 2009 3:20 PM | Report abuse

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