Wednesday, February 11, 2009

Free Money

I was reading an article in the paper on Tuesday morning that was talking about the new really, really expensive economic stimulus bill that Congress is working on passing. What caught my eye was a section where they were talking about the portion of the bill that dealt with the homebuyer's tax credit.

Last year they passed a law that gave a 15,000 tax credit to first-time homebuyers, subject to be paid back over ten years. For this stimulus bill apparently they are looking to enhance that. The House version of the bill offers a 15,000 tax credit subject to phase out based on income over 150,000 but with no repayment requirements. The Senate bill sees that offer and raises, giving up 15,000 tax credit with no repayment, no income limits and no restriction on being a first-time homebuyer.

Meaning, effectively, that they are offering 15 grand straight up if you buy a house, any house. Which is pretty crazy, and virtually guaranteed to inspire a temporary bubble in home prices. I've read a number of articles that are talking about the difficulty in incenting people to continue buying homes in a disastrous economy and home market, with many different suggestions. But 15,000 seems like enough money that it would certainly make people even remotely considering moving give it a second thought.

I am not sure what will end up in the final version of the bill, but it is probably worth paying attention to.

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