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BOSTON (MarketWatch) — Call it the Great Rock & Roll Real Estate Swindle. Call it a $26 billion Bait & Switch. Call it the Mother of All Boondoggles.
Call it whatever you want.
But as foreclosures surge again and house prices continue to slide, new data out Monday reveals more of the grim verdict on the $26 billion federal program in 2009 and 2010 to offer tax credits to home buyers.
You may remember that between the spring of 2009 and September 2010 the government handed out credits of up to $8,000 to induce people to buy a new home. It was supposed to gee up the housing market.
How’d that work out?
First off, it raised the price of housing by double the incentive. That was nationwide. High priced areas were the cherry on the top. Look out commissions and loan initiation fees!
Zillow.com, the real estate information company, says the average price of an American home fell again last month to $171,500 — the lowest level in eight years. That’s down 4.4% from a year ago, although it’s been about stable over the summer.
Now compare the average prices with those that people paid in 2009 and 2010, when they took advantage of the credits.
According to Zillow, prices during that time averaged about $186,000.
In other words, based at least on average prices, you’ve lost about $14,500 — nearly twice the value of the credit. Stan Humphries, Zillow’s chief economist, says the credits, effectively expired in June 2010, when prices nationwide averaged $182,000. Since then we’re down $10,500.
The biggest losers? Step forward all those who took up Uncle Sam’s $8,000 bribe and rushed out to buy a new home in Santa Barbara, Calif. You have already lost $50,000 of your $440,000 investment. And that’s even counting the $8,000 bribe!
Others who are already down more than $30,000 include home buyers in places like San Francisco, Seattle, Flagstaff, Ariz., and anyone who bought down the road from the underground bunker of MarketWatch’s own Paul “The Road” Farrell in San Luis Obispo, Calif.
Oh, and check out Carson City, Nev. The typical homes only cost about $190,000, and even after counting the $8,000 credit you’re already down $8,000.
The IRS says the entire program cost taxpayers $26 billion (though of course it was put on the national credit card, on which interest rates are very low). That money has vanished. It has, as the saying goes, “gone to money heaven.”
http://www.marketwatch.com/story/the...ce=patrick.net
BOSTON (MarketWatch) — Call it the Great Rock & Roll Real Estate Swindle. Call it a $26 billion Bait & Switch. Call it the Mother of All Boondoggles.
Call it whatever you want.
But as foreclosures surge again and house prices continue to slide, new data out Monday reveals more of the grim verdict on the $26 billion federal program in 2009 and 2010 to offer tax credits to home buyers.
You may remember that between the spring of 2009 and September 2010 the government handed out credits of up to $8,000 to induce people to buy a new home. It was supposed to gee up the housing market.
How’d that work out?
First off, it raised the price of housing by double the incentive. That was nationwide. High priced areas were the cherry on the top. Look out commissions and loan initiation fees!
Zillow.com, the real estate information company, says the average price of an American home fell again last month to $171,500 — the lowest level in eight years. That’s down 4.4% from a year ago, although it’s been about stable over the summer.
Now compare the average prices with those that people paid in 2009 and 2010, when they took advantage of the credits.
According to Zillow, prices during that time averaged about $186,000.
In other words, based at least on average prices, you’ve lost about $14,500 — nearly twice the value of the credit. Stan Humphries, Zillow’s chief economist, says the credits, effectively expired in June 2010, when prices nationwide averaged $182,000. Since then we’re down $10,500.
The biggest losers? Step forward all those who took up Uncle Sam’s $8,000 bribe and rushed out to buy a new home in Santa Barbara, Calif. You have already lost $50,000 of your $440,000 investment. And that’s even counting the $8,000 bribe!
Others who are already down more than $30,000 include home buyers in places like San Francisco, Seattle, Flagstaff, Ariz., and anyone who bought down the road from the underground bunker of MarketWatch’s own Paul “The Road” Farrell in San Luis Obispo, Calif.
Oh, and check out Carson City, Nev. The typical homes only cost about $190,000, and even after counting the $8,000 credit you’re already down $8,000.
The IRS says the entire program cost taxpayers $26 billion (though of course it was put on the national credit card, on which interest rates are very low). That money has vanished. It has, as the saying goes, “gone to money heaven.”
http://www.marketwatch.com/story/the...ce=patrick.net
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