It is about time!

I am sure by now most people have heard that the home buyers tax credit has been extended.  Which is great news for everyone who is interested in buying or selling a house.  The first-time home buyers credit of $8,000 was extended and a new credit was added for existing homeowners looking to buy another.  If you own a home you can now buy another and the government will give you $6,500. See details.  That is not a bad deal.  The government wants you to buy homes.  Many people would like to move up in house but have been hesitant because of market conditions.  While other are just barley getting by and could use the tax credit to move down in house.  Down in house?  Wait that can’t be the best thing for this country.  Oh but maybe it is.
Consumers moving “down in house” or moving to a less expensive house could be great for this country.  While that is not really good for those who own expensive homes it could be good for everyone else.  Good for two reasons.  First, moving down in house would allow homeowners to take equity and pay off other debts.  Second, it will lower mortgage payments for the homeowner.  Both of these will allow for more expendable income in the long run.  Downsizing in house is not good for the real estate prices but it would be good for other consumer driven industry.
Many consumers have been over spending there income for years.  Relying on continued home appreciation to come to the rescue and pay off there debt.  Now, faced with reality, homeowners are looking for ways to down size there mortgage payments to unlock more disposable income.  The unlocking of disposable income will lead to more jobs and a happier economy.  A happier and healthier economy will in turn lead to higher real estate prices.  We simply have gotten out of balance.  We have moved to quickly with home appreciation and have gotten to a place where there is to much money tied up in our homes and not enough in the market place.
As we see more money flow out of homes and back into the economy we can rest assured that home values will again appreciate.  In the long term they always have.   The Extended Home Buyer Tax Credit will help do this but not in the way we all think.  This bill will help people buy new homes and the transaction alone will build the economy.  Unfortunately it could lower home values in the process.
Once consumers can regain the balance between there income, home mortgage, savings, and spending we will see a happy economy.  As savings accounts balances rise so to will real estate prices.  Lenders will have money to lend and buyers will have real down payments again.  It will be interesting to see what happens in the short term.  But we know the long term looks bright.  We just need a little balance.
If you already have good balance and are interested in getting some free money from the government give me a call.  I would be glad to help you buy your first home or add to the collection you already have going.
Ed Neuhaus

About Ed Neuhaus

El Capitan is a nickname given to me years ago. This was just before or just after I was married. No, unfortunately it was not given to me by my wife. She has far better and worse things to call me. I sailed a lot a young man and I know a thing or two about sailboats. Maybe that is why I got the nickname. Maybe my nicknamers were thinking I was strong as a rock like El Capitan in Yosemite National Park. I hope it was because they thought of me as their leader. I am el Capitan of our ship, Broker for our company, father of two, husband, sailor, drummer, soon to be pilot, and all around bad ass. Ok maybe that last part about the bad ass is too much. But hey, why not. BTW, did I tell you I want to be a pilot? no wait, really, I want to be a pilot. You know the guys who fly planes. (this would all be a lot better in a video soliloquy than in typed form, but use the tools you got right?)

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