President Bush signed H.R. 3221, otherwise known as the Housing Stimulus Bill, into law. NAR is rather excited about the bill … but I’m not so sure.
One of the more talked-about provisions is the $7,500 tax credit for homebuyers … except it’s not really a pure tax credit. Rather, it’s essentially a 10-year tax-free loan available only on qualifying purchases (foreclosed or “recently built” homes) and available only to qualifying buyers (like anything tax related, there are some income limits built into the process.)
I guess the mere fact that the credit is less robust than first suggested leaves me less sanguin than I was yesterday at the thought of incentives only being offered on the purchase of foreclosed homes. The last thing your average home owner needs is for there to be additional incentive for buyers to ignore their homes for sale in favor of a bank-owned “deal.” (Note to Congress, et al: REOs are selling at a much faster rate than the rest of the real estate market.)
Another provision in the bill does away with down-payment assistance programs such as Ameridream and Nehemiah. Through these programs, sellers could help buyers with their down payments in addition to closing costs by making a contribution to the non-profit (with a nominal processing fee attached.) As of October 1, those go away.
I understand the concern about the percentage of FHA purchases being made through these programs, or at least I try to. For the most part, people qualifying for FHA loans legitimately are qualified to buy. You’re not seeing the shell games played with an FHA loan that you saw with sub-prime loans.
The only thing these buyers lack is sufficient money for a down payment. Having been in that situation myself, I can empathize with their plight … they have the credit, they can afford the payment and all they need is a helping hand to get them into their home.
Now that opportunity is gone (or will be shortly) in favor of tax credits that do next to nothing when all is said and done.
NAR can celebrate the “victory.” Me? I’ll take a pass.