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Interesting home statistics for the day
Thursday, December 31, 2009
The $8,000 homebuyer tax credit in relation to the average sales price for existing homes over the summer of about $220,000 (per the National Association of Realtors) is:
3.6%
The percentage that home prices have risen from May to October (per the seasonally adjusted S&P Case-Shiller 20-City Home Price Index) is:
3.4%
Obviously there are other ways to look at this. For example, relative to the median sales price for existing homes of about $175,000, the $8,000 tax credit is 4.6 percent, more than a full percentage point greater than the increase in seasonally adjusted home prices. Or, using unadjusted Case-Shiller data, home prices have increased 5.3 percent since the spring, greater than either tax credit percentage.
Whatever figures you use, the tax credit and the home price gains are pretty close.
There is clear message here for the U.S. government. If they really want home prices to go back up, they need to drastically increase the tax credit. Maybe they should double it to about $15,000 next summer and then move it up to $25,000 or so in 2011, increasing the tax credit regularly as needed to keep home prices rising.
6 comments:
If they want to make me happy, they'll turn off the music, then where everyone is living, they'll have to stay. Real life musical chairs. I live at the beach and would enjoy a free beach house.
If you factor in the artificially low interest rates, it's a net decline......
Please don't give them any ideas Tim. It's bad enough I have to pay my rent, pay taxes to homeowners to afford the new higher prices, and keep home prices up where I couldn't afford them if I wanted to.
I've been saying this since they proposed the homebuyer credit: if you give people $8K more dollars to throw at Real Esate, you can expect the price of homes to go up $8K.
So it's really not being done for the benefit of the buyer (save, perhaps, for those buyers who might use the credit as a way to have a downpayment, possibly more of a risk than a benefit, anyway).
The true beneficiaries of the tax credit are the banks, because it helps to put a floor under home values, and thereby increases the value of assets banks have on their books, and helps to reduce the number of strategic defaults, too.
Tim, dont give them any ideas.
Happy New Year.
Its cheaper for taxpayers to just shut down all the banks that made stupid loans, and start over again. Maybe this time the new banks will adopt sensible business models.
New banks could hardly do any worse than the old ones, which have completely worthless business models.
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