Friday, February 22, 2008

Outrageous builder bailout

I just saw this article, subtitled, "A substantial tax credit for home buyers is likely to be part of any second economic stimulus package enacted by Congress", on Marketwatch today:

Senate Democrats reportedly already have crafted a measure that includes a credit for taxpayers who help take down the record inventory of unsold homes. And when the Senate Finance Committee meets in a few weeks, Republicans are likely to join them in pressing for a version of a plan that worked in the mid-1970s to help clear off a then-record glut of completed but unsold houses. ...

In 1975, when there was almost a three-year supply of vacant houses on hand, lawmakers approved a $6,000 credit spread over three annual installments of $2,000 per year.

According to the NAHB, that carrot brought enough buyers into the market that builders and their subcontractors were able to get back to work. Inventories fell and production doubled, taking the pressure off of housing prices.

This time around, the builders are angling for a $10,000 credit, maintaining that on a price-adjusted basis, that amount is equal to the 1975 credit. ...

"What we really need is something to stimulate sales," he said at the convention. "It's housing and the financial markets that are taking the economy down. We've got to get home buying going. If we don't get this thing knocked down, the prospect for recovery is tenuous."

Outrageous! In short, taxpayers should pay builders $10,000 for each house sold, rather than builders reducing prices the same $10,000. They're the ones who built too many houses.


Anonymous said...

This is a total total outrage

people have to stop buying houses they can't afford


Anonymous said...

Its not the builders....they are filling a need... look how many crappy tract homes sold in the I.E. in the past 3 years....but it was the simple 'supply and demand' formula the developers followed. Its the stupid people that HAD to have a house for their kids and could only afford San Bernardino.

No one should feel sorry for the developers of course, they made their money and now they will pull up and look for more cheap land and wait it out....

No government bailout for them....they will look for other idiots to buy their homes....

Anonymous said...

This is just part of a larger stimulus package, an effort to keep people in their jobs. What's so horrible about that? Do you really want to see the domestic economy come to a stand still? Even if I could buy a house for a little less, I don't want to live through a depression.

Westside Safari said...

I agree we should try to do something to help the economy. However, the point of the post I think is the most important: THE BUILDERS SHOULD LOWER THE PRICE $10,000.


Anonymous said...

I agree that builders need to price their inventory to the market. But from what I've read about the tax credit it looks like it may apply to existing homes as well as new. Anyone have info on that?

Anonymous said...

why limit it to people that buy houses -

just give everyone in the usa $10,000 to spend

Anonymous said...

"just give everyone in the usa $10,000 to spend"

You mean, except for the people who actually pay the taxes. Because they're already rich and don't need it.

Anonymous said...

The above posts ae hilarious

The number of illegal immigrants coming in to Santa Monica is accelerating rapidly. They live ten to a house. The education of their kids costs millions of dollars and they pay zero property tax

Santa Monica's lefty political class has invited in the illegals just like they have invited in the homeless

Owners in SM will drown under the property taxes,

i won't even mention how the California state taxes will go up

take a look at reality

Anonymous said...

Huh? Illegals are leasing homes in SM? Where in SM? The school district has just reported a decrease in enrollment and the Latin American/African American % of students in SMMUSD is declining....The Pico Neighborhood is rapidly going Yuppie and pushing out the minorities....where are you getting this information????

Anonymous said...

Business owners sue firms accused of hiring illegal aliens
Date: Thursday, August 24 @ 17:39:03 CDT

Santa Monica, Calif.-based Global Horizons claimed in the lawsuit that Munger Brothers, a grower, hired illegal alien workers from Ayala Agricultural Services and J&A Contractors.


Illegal Immigration Costs California $10.5 Billion Annually (read more)
Immigration and its consequences has become a serious concern for liberals, conservatives, environmentalists, the elderly who are dependent on affordable healthcare and families with school children. The “Mervin Field Poll” taken in September of 2005 indicates that 81% of Californians are concerned about the impact of illegal aliens on the State and that 49% are alarmed.

The overwhelming majority of Californians are now aware that the State's "cheap labor" costs the average household $1,183 a year. It is harder to put a cost on the “dumbing-down” of our schools to accommodate a massive number of non-English speakers, the closing of 60 Los Angeles County emergency rooms due to uninsured illegal aliens as reported by Dr. Madeleine Melner Cosman) , the clogging of our highways where thousands of drivers are illegal aliens, most driving without insurance; which makes uninsured motorist coverage more expensive. Can we put a price on the harm of over-population on the environment?

Laker said...

The builders should lower the price at least 10,000.
Then, if they can't sell it, they should reduce the price until it finds market values and sells. What a concept...right?
When i go to the grocery store to buy something that has expiration date, when the date comes closer, it gets on sale! If they reduce the price, and can't sell it, they throw it to the garbage!

Anonymous said...

That's why I don't vote for Liberals or Democrats, they always want to bail people out. What ever happened to learning the hard way?

Anonymous said...

Helloooo - The big expensive corporate bailouts come from the republicans - republicans heart corporations. To be sure no one is worried about the people - it's all a way of keeping money into the pockets of big business (banks, KB Home, etc)

Anonymous said...

This is a builder and mortgage lender problem. I used to work alongside them when they carefully calculated ways to raise prices $10,000 when the market was shooting up. There was an internal mandate to keep the cancellation rates high in order to make sure you are putting everyone who comes close to being able to afford a house for six months into that house. It was total collusion and people who weren't on board were not given business (e.g. appraisers who were unwilling to ascribe lofty valuations to the homes in, say, Antelope Valley).

Sure, on some level the builders were just meeting a need, but as the market continued to churn and the huge piles of cash were at stake it became an exercise in gouging the public to the maximum extent. Builders went from service providers to kingpins in a large pyramid scheme that included builders, lenders, brokers, and media.

What I really want to say is that there should be no bailout that helps banks or builders because they were partners in taking this market to its unsustainable highs in order to eek out huge bonus checks. But we know how this works, and any further "stimulus" or "bailout" package will probably do more to help the corporations that it does for the individual. God bless America and our wonderful ways...

sexy said...