Thursday, January 21, 2010

The Effects of Incentives

You know what's strange about government incentives like the $8000 tax credit and low mortgage rates due to government purchase of the loans from banks? It seems to me that if you give all the home buyers an extra $8000 that prices of the homes they can buy will go up $8000. And after that incentive expires and buyers don't have the $8000, prices will fall by 8000? By my math that's a wash.

It's the same with low interest rates. If people could borrow less, prices would fall so they wouldn't have to borrow as much. The payment would be the same but the goverment wouldn't have to get involved.

I think I'll just wait till rates rise and the incentive are gone. Then I'll buy at the new lower house prices.

-Mr. Bubble

Housing thaw ahead?

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  1. that doesn't make any sense at all, and your math is incorrect. You know this though, because you've mentioned too many times now that the prices have been falling, not going up (by $8,000 or any $,000). They are going down, remember?

    And, you don't seem to know the difference in the markets. "Markets" meaning "price ranges". Your Tax Credit RE Buyers and your High End Home Buyers are different markets.

    I'm betting that your reluctance to buy right now is the same reluctance that will keep you from buying anytime.

    All of your comments are common thoughts and common remarks made by lookers right now. Remarks that come straight from Reluctance, opposed to Strategy and Up To Date Education.

    You don't seem to have a set goal, therefore, if you are to actually attempt buying real estate any time, it will be after the market shifts again, in which case you will be just like the rest of the reluctant buyers out there and will be stepping in too late and under bidding on every property you try to buy. You will miss your opportunity to strike because you will still be (mentally) in the "falling market mindset". The market will continue to climb at a rate that you simply cannot believe and simply cannot commit to catching up to.

    At that point, you'll give up on the real estate game and you'll go explore the stock market and start your own blog about your mixed opinions there too.

    It happens all the time. The market could cut prices in half today, and guess what you would do? You would say... "hmmm, if it's this low today, I should wait til tomorrow and see how low it will go!"
    Then, you miss the bottom and you can't catch up.

    You Have No Strategy, No Plan, and No Help From A Professional that can give you accurate information because you think you will save a buck (or 3%).

    Common Common Common.

  2. People buy what they can afford in the long run. Your math is seriously oversimplified!

  3. Don't sweat the Realtors and agents on here, bub. Remember what Upton Sinclair said: It is difficult to make a man understand something when his salary depends on him not understanding it. These realtors have their panties in a twist because you aren't willing to stuff 6% into their jeans right now when they could really use it. And the verdict is in: houses will not be appreciating like they were during the bubble for a decade or two -- if even that soon. Why? No more easy money.

    FACT:. Unless you score a shortsale, (read, forced market correction), it is a horrible time to buy, but especially beceause interest rates are so low right now. House prices fall as interest rates rise, because a fixed monthly payment covers a smaller mortgage at a higher interest rate. Since rates will be going up soon, prices have nowehere to go but down. The way to play and win is to buy outright at a LOW PRICE when others cannot borrow very much because of high interest rates. Then you get a low price and you get capital appreciation caused by falling interest rates. You also have lower property taxes with a lower purchase price, and even if your monthly payment is the same, you will be paying more toward principal, rather than be a slave to the banks.

    Realtors are in the business of lying. It is a lowlived livelihood. They have a BMW payment to make. They report false bids and do everything in their power to obscure any kind of transparency in a transaction. Do not expect anything but the freshest of horse dookie from them. Indeed, as a buyer, I would reccommend using a Real Estate lawyer in lieu of an agent. Cheaper, and much less shady.