I could scarcely believe my eyes when I read that headline this past Monday morning. Yet that’s exactly what HUD secretary Shaun Donovan suggested in an interview with CNN on Sunday.
The idea is so bad it’s hard to know where to begin. Another tax credit is not going to revive a slow housing market. Yes, we saw increased activity in March and April this year, mostly due to the tax credit, but those were buyers who had planned to buy this year anyway. As we saw when the June and July sales numbers came out, we simply cannibalized our summer buyers and moved them forward to spring. We didn’t stimulate anything, and we certainly didn’t create more demand for housing.
Gimmicks like the tax credit will simply delay the inevitable – the housing market isn’t going to recover until buyers are a lot more certain about the economy. I’d suggest with the current crop of suits in Washington, that won’t be anytime soon. We’re blessed with low unemployment here in Lincoln, but people are still scared about losing their jobs. Those people aren’t rushing into the market to buy a house anytime in the near future. Fear causes people to pull back, and buyers are clearly taking a ‘wait-and-see’ attitude. Even interest rates around 4% aren’t enough to get many to jump off the fence and take the plunge.
Our real estate market has been fortunate to avoid the real estate bubble … but if the feds continue trying to ‘help,’ we’re going to feel the impact a lot more than we already have. Another tax credit is a bad idea … which means we should probably expect the sequel sooner rather than later.
Interest rates are low, and buyers definitely have an advantage now. If you’re considering a move, I’d welcome the chance to visit with you!