July 24, 2008
Housing Market Legislation Update
On Wednesday, President Bush dropped his opposition to the current housing market legislation despite his objections to a $3.9 billion provision. It includes about $15 billion in housing tax breaks, including a credit of up to $7,500 for first-time home buyers for people who bought homes between April 9, 2008, and July 1, 2009. It also allows people who do not itemize their taxes to claim a $500-$1,000 deduction on their 2008 property taxes. That benefits homeowners who have paid off their homes and cannot claim a deduction for mortgage interest. The bill would increase the statutory limit on the national debt by $800 billion, to $10.6 trillion.
The bill further sets a cap of $625,000 on the loans that Fannie Mae and Freddie Mac may buy and the FHA may insure. However, it also lets them purchase and back mortgages up to 15 percent above the median home price in some areas.
July 24, 2008 | Permalink
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This bill might help the housing market a little, but I think everyone agrees that it won't solve the problem entirely. I wonder if this money would be better spent more directly at the point of purchase. Many home builders are already scrambling to find discount and rebate programs to entice buyers- some of them fairly extreme. I wonder if tax rebate might be better spent across the board as a government subsidie to decrease loans value gaps for all lenders (not just the Maes). The real problem is that many people's home appraisels are coming up short of the loan value they would need to make the deals happen- putting the money at the point of sale would go a lot further than reducing a customer's tax position up to a year later.
Posted by: Tr_Evian | Jul 24, 2008 6:22:59 PM
Is there really a problem to fix? Housing prices became inflated as everyone piled in with tenuous loans. Prices have to come down for the market to clear. Why are we working so hard to re-inflate the same leaky bubble?
Posted by: Methinks | Jul 30, 2008 1:31:54 PM