The First Home Owners Grant nightmare continues, with elements of it borrowed and extended by the American HUD. Young US home dreamers will suffer like we have:
Two new applications of the federal tax incentive for first time homebuyers – allowing them to use the $8,000 credit for down payments and on land contracts -will allow more people to take advantage of the purchase incentive, said housing industry experts.
Housing and Urban Development Secretary Shaun Donovan announced this month that Federal Housing Administration-approved lenders could monetize the tax credit through short-term loans so that buyers could use it for down payments.
The American twist is that land bankers can also benefit from it. As commented on time and again via this blog, the First Home Owners Grant should be re-named the Home Sellers Subsidy. If everyone gets $8,000, then the price of land and housing goes up at least $8,000. The same can be seen for most markets, with the $2000 subsidy for LPG car fit outs increasing the price by the same amount. Reports are coming through that the $1600 Home Insulation subsidy is having similar effects there too.
The US article goes on to quote the glee in the real estate industry:
Matt Dejanovich, a Realtor with Real Estate One in Ann Arbor, said being able to apply the tax credit toward down payments would have an immediate impact. That’s because, he said, many potential buyers who would quality for the credit and have secured loans just don’t have the cash on hand for down payment and closing costs.
“If there was a way to get your hands on that money at the closing table, I could sell a house this afternoon,” he said.
With 19 million vacant homes existing and half finished houses being bulldozed throughout the US, the last thing they needs is more urban sprawl. That is what the extension of the tax credit will do to the land market.
Lobbyists win again. Real estate agents should be called Fffffantasy Agents. Who is standing up for the rights of young American families? Economic trickery will only be outlawed when people have a decent understanding of economic forces. Listen to our podcast.