The stimulus bill and you

With the economic stimulus bill making its way to President Obama, I thought I’d give you some info on the Realtor® perspective (more specifically, the NAR perspective).

First off, if you’re in a Googling or Wikipedia-ing mood, the official name of the bill is American Recovery and Reinvestment Act of 2009. And kudos to Congress for not trying to force an acronym on us (“Super Timely Important Measure for Using Lawmakers…”).

That said…

Right now, the bill has passed the House and is doing the whole House-Senate dance thing.

There are two parts of the bill that are of interest to NAR.

1. An extension of the 2008 high-cost-loan limits for GSE’s and FHA to the end of 2009.
2. A change to the first-time-homebuyer tax credit that eliminates the repayment feature.

About point #2: The House version only applies to first-time buyers, it ends June 30th, and it will not be retroactive for those who used the credit in 2008. A good start, at least. The Senate version extends that tax credit until August 31st. (NAR wants to get it changed to December 31.)

As the bill bounces around in the Senate, there are likely going to be changes. Could be Republican amendments, could be Democratic ones. For example, Senator Johnny “Johnny” Isakson of Georgia suggested what he calls a “Fix Housing First” amendment that would greatly expand the tax credit — both in sheer dollars and to include all buyers.

Once merged and passed (and yes, it will pass), it should be signed into law by the end of the month. Stay tuned right here for commentary and perspective.

About Andrew Kantor

Andrew is VAR's editor and information manager, and -- lessee now -- a former reporter for the Roanoke Times, former technology columnist for USA Today, and a former magazine editor for a bunch of places. He hails from New York with stops in Connecticut, New Jersey, Cincinnati, Columbus, and Roanoke.
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12 Responses to The stimulus bill and you

  1. Throwing money at the problem will not ultimately solve our housing issue. The Beaufort South Carolina Real Estate market has been hard by overpricing and surplus. Trying to pass a bill that will encourage people to spend even more makes little to no common sense. Let the market correct itself with price reductions and reduction in homes. I just cannot understand why America and it’s citizens are so short sighted.

  2. Joe Vita says:

    A Better Way To Stimulate!

    The American Recovery and Reinvestment Act of 2009 is about as stimulating as a marshmellow hitting you on your arm. This is evidenced by the very few who appear to be taking advantage of its supposed allure.

    While NAR is on the right track by proposing that ALL home buyers get a tax credit that doesn’t have to be paid back and can be taken advantage of anytime during the remainder of this young year, it still falls short. Its recommendations are about as stimulating as a thumb tack on a bare foot. Gets your attention but doesn’t really get you all that worked up.

    What is really needed to get buyers off of their seats and into the market is to make the stimulus an actual credit received by buyers at closing. How about the lender providing the settlement agent with wired funds for closing that includes both the loan proceeds as well as an additional $10,000.00 to help with a buyer’s downpayment? How about if this money comes out of the upteen billion dollars that the lender has already received and probably will continue to receive from the government for the leagally stated purpose of helping out our sick ecomony in some approprioate manner?
    This would be the equivalent of getting stimulated in a place, manner and time when you really need it so that you respond appropriately. (Reader should use his/her imagination here)
    There’s no need for a tax credit at all. A credit is nice but it arrives too late to get excited about. Tell a prosectiver buyer who has been sitting on the fence waiting for prices to hit bottom that he’ll get about $10,000.00 to put toward a downpayment, needed improvements, or furniture and see what happens.
    Funds needed to stimulate have already been dolled out to the banks. It’s time they deliver the peoples’ money to the people. It’s that simple.
    Make that change to the law and watch a good number of buyers start making offers that put smiles of satisfaction and relief on the faces of some concerned sellers. Then watch as related industries begin to show some signs of life. Will it cure the economie’s ills? No, but it will actually stimulate.

  3. I agree this definatly won’t solve our problems. I wonder how many people are actually taking advantage of the $7500 first time home buyer tax credit? We are the same way our prices sky rocketed and our market was just over priced. It had to end

  4. mary dykstra says:

    I think we are all frustrated with the gazillion dollar giveaways that seem to completely miss the housing sector, but I will argue that the tax credit (for at least first timers, forgivable and retroactive) could be a real benefit. The problem is that the repayment plan was cumbersome and I believe most REALTORS didn’t really market it to our buyers. I used it in all my buyer counseling sessions after it passed last year, and found that when buyers understood how a tax credit functions, they were excited by it. Of course, leave it to the feds to botch it up. I have been in touch with both my senators to let them know that the forgivability needs to be retroactive to coincide with the credit. It makes no sense that a buyer who bought on 12/31/08 has to repay the credit, but one who bought on 1/1/09 doesn’t. We need to remember that the first time buyers are the “little engine that could” for our housing market. Without them, nobody else moves up. I would love to see the credit expanded to all buyers, but I believe that is pie in the sky. From what I hear, our Virginia legislators say there is no money for a much more modest credit for first time buyers, so I doubt that we will be able to wring much more out of the feds. We all need to be proactive in contacting our federal legislators to discuss our concerns about the lack of help in the stimulus package for renewed vigor for the housing sector. If you really want to disrupt your sleep for several nights- take a look at HR1 that has been approved by the House. I promise you will be astounded. And while you are at it- make a healthy RPAC contribution- our lobbying efforts will be more important than ever before!

  5. I wish we could get this to apply to all buyers. We have been advertising it but a lot of my first time buyers are a little hesitant about getting into a home right now just because they think prices will continue to fall.

  6. I thought that I had heard that the senate version of the bill had a $15,000 credit and could be used by any home buyer, not just first time buyers?

    I still believe that you solve the real estate markets issues and you solve most of the problems that kicked off this recession.

  7. VA Home Loan says:

    They did change the wording and it applies to all home buyers. This is great. They have done something right in the whole bill. It would be nice if they could clean up the rest of the pork in it. According to the bill it says it will cost tax payers $19 billion dollars. I think they are wrong. It will save tax payers $19 billion dollars. The less money tax payers have to spend on taxes and big government, the more money they have to buy houses and consumer products. The stimulus package needs more of this and less pork!!!

  8. CJ Brasiel says:

    Affordability is still an issue. Prices need to drop to make the average, two-check family able to afford a decent house. Large down payments on 3/4 of million dollar homes limits buying potential. Most of my clients make too much money to benefit from the tax credit/loan (limit $75K) and yet are struggling to come up with the 10-20% down. For the California market to change, affordability has to be there or creative financing (some have suggested government loan rates at 2.99%) or incentives like FHA max increases. I don’t necessarily agree with the 18B this tax break will cost us but I do know 2-3 more years of REOs will absolute trump the pain we feel now.

  9. Tom says:

    Yes, right now the senate version of the bill has a $15k credit that can be used by non-first-timers, from what I understand. The $15k is applied to two years of home buyers’ income. This is a credit that can help buyers of expensive homes as well as lower priced homes. However, this hasn’t been approved yet.

  10. CJ- I think your right. the problem is the that those that make over 75k don’t qualify and those that make less can’t afford. Is there a way to use the tax credit on creative financing like lease options or seller financing?

  11. Ryan Martin says:

    I don’t know if the tax credits will solve the entire housing market, but it is beginning to make a difference in our market. We had six young couples walk into our open house this Sunday and all six of them said that they were motivated by the tax credit. We also have a low percentage of foreclosures in our market, so getting the first time home buyers in the game will help the mover up buyers get going.

  12. Joe Vita says:

    At least the Senate is headed in the right direction. All they have to do now is turn the $15,000.00 non-refundable “tax credit” they propose in their version of the bill into an “actual credit” given to the buyer at closing by the very banks who already have been given our money and haven’t stimulated anything with it yet. Have them give it to buyers when they actually need it and watch them buy…in large numbers. An additional advantage of this proposal would be that the government will not loose any tax money at all.

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