how much does federal home credit boost home prices?

[ybitz]

Does anyone know how the $8k federal first time home buyer credit boosts house prices by? In other words, all else being equal, how much should house price drop after the credit expires?

My thoughts:
Not all buyers qualify for the $8k credit. So the price boost we would expect to be less than if everyone qualifies.
The upside of $8k cashback to buyer is more than the downside of $8k increase in house price. Cash in hand now is worth more because of the time-valued worth of money, plus it amplifies how much they can borrow.

Just pulling numbers out of my ass, I think the $8k credit had boosted the price by $10k-$20k. Lower range for expensive houses (where the credit doesn’t help as much and fewer buyers in that category are first time home buyers), and near $20k for starter-homes because nearly all buyers qualify, and it boosts demand while keeping the supply curve the same. And we should expect a drop in house price after the tax credit expires.

What do you all think will happen after the tax credit expires?

[all]

It helped mostly by pulling the demand forward by creating an incentive to buy now, as opposed to buy later. The price increase came as a consequence of increased number of potential buyers, not the tax credit per se.

I did not offer more to capture the credit, I offered as little as I could to get the house. The credit is just a bonus.

I took my taxpaying coworkers out for a drink when I got it. The remaining $7,750 I put in a savings account.

[all]

It helped mostly by pulling the demand forward by creating an incentive to buy now, as opposed to buy later. The price increase came as a consequence of increased number of potential buyers, not the tax credit per se.

I did not offer more to capture the credit, I offered as little as I could to get the house. The credit is just a bonus.

I took my taxpaying coworkers out for a drink when I got it. The remaining $7,750 I put in a savings account.

[all]

It helped mostly by pulling the demand forward by creating an incentive to buy now, as opposed to buy later. The price increase came as a consequence of increased number of potential buyers, not the tax credit per se.

I did not offer more to capture the credit, I offered as little as I could to get the house. The credit is just a bonus.

I took my taxpaying coworkers out for a drink when I got it. The remaining $7,750 I put in a savings account.

[all]

It helped mostly by pulling the demand forward by creating an incentive to buy now, as opposed to buy later. The price increase came as a consequence of increased number of potential buyers, not the tax credit per se.

I did not offer more to capture the credit, I offered as little as I could to get the house. The credit is just a bonus.

I took my taxpaying coworkers out for a drink when I got it. The remaining $7,750 I put in a savings account.

[all]

It helped mostly by pulling the demand forward by creating an incentive to buy now, as opposed to buy later. The price increase came as a consequence of increased number of potential buyers, not the tax credit per se.

I did not offer more to capture the credit, I offered as little as I could to get the house. The credit is just a bonus.

I took my taxpaying coworkers out for a drink when I got it. The remaining $7,750 I put in a savings account.

[CA renter]

If FHA loans can be had with 3.5% down, and I believe the $8,000 tax credit can be monetized:

RISMEDIA, June 11, 2009-First-time home buyers who would otherwise qualify for the $8,000 tax credit, but don’t have the money for a down payment or closing fees, may now be able to get a loan to help cover those upfront costs.

The U.S. Department of Housing and Urban Development (HUD) announced on May 29 that the Federal Housing Administration (FHA) will allow state housing finance agencies to provide second mortgages “monetizing” the tax credit so that borrowers can use the funds toward their down payments and closing costs for the purchase of homes with FHA-insured mortgage loans.

http://rismedia.com/2009-06-10/fha-tax-credit-monetization-helps-home-buyers-with-upfront-costs/

…which means that some schmoe with no money (sound familiar?) can now buy a $228,571 house (especially if the seller “credits” the buyer money toward closing costs — a total scam!).

Essentially, anyone who wants to buy a home and can afford approximately $1,500-$1,700/mo. (guestimating) is able to do so.

This absolutely affects demand at the lower end, and consequently, at the price points above that, if there is any equity in the lower-end homes.

The termination of these horribly misguided govt give-aways cannot come soon enough.

[CA renter]

If FHA loans can be had with 3.5% down, and I believe the $8,000 tax credit can be monetized:

RISMEDIA, June 11, 2009-First-time home buyers who would otherwise qualify for the $8,000 tax credit, but don’t have the money for a down payment or closing fees, may now be able to get a loan to help cover those upfront costs.

The U.S. Department of Housing and Urban Development (HUD) announced on May 29 that the Federal Housing Administration (FHA) will allow state housing finance agencies to provide second mortgages “monetizing” the tax credit so that borrowers can use the funds toward their down payments and closing costs for the purchase of homes with FHA-insured mortgage loans.

http://rismedia.com/2009-06-10/fha-tax-credit-monetization-helps-home-buyers-with-upfront-costs/

…which means that some schmoe with no money (sound familiar?) can now buy a $228,571 house (especially if the seller “credits” the buyer money toward closing costs — a total scam!).

Essentially, anyone who wants to buy a home and can afford approximately $1,500-$1,700/mo. (guestimating) is able to do so.

This absolutely affects demand at the lower end, and consequently, at the price points above that, if there is any equity in the lower-end homes.

The termination of these horribly misguided govt give-aways cannot come soon enough.

[CA renter]

If FHA loans can be had with 3.5% down, and I believe the $8,000 tax credit can be monetized:

RISMEDIA, June 11, 2009-First-time home buyers who would otherwise qualify for the $8,000 tax credit, but don’t have the money for a down payment or closing fees, may now be able to get a loan to help cover those upfront costs.

The U.S. Department of Housing and Urban Development (HUD) announced on May 29 that the Federal Housing Administration (FHA) will allow state housing finance agencies to provide second mortgages “monetizing” the tax credit so that borrowers can use the funds toward their down payments and closing costs for the purchase of homes with FHA-insured mortgage loans.

http://rismedia.com/2009-06-10/fha-tax-credit-monetization-helps-home-buyers-with-upfront-costs/

…which means that some schmoe with no money (sound familiar?) can now buy a $228,571 house (especially if the seller “credits” the buyer money toward closing costs — a total scam!).

Essentially, anyone who wants to buy a home and can afford approximately $1,500-$1,700/mo. (guestimating) is able to do so.

This absolutely affects demand at the lower end, and consequently, at the price points above that, if there is any equity in the lower-end homes.

The termination of these horribly misguided govt give-aways cannot come soon enough.

[CA renter]

If FHA loans can be had with 3.5% down, and I believe the $8,000 tax credit can be monetized:

RISMEDIA, June 11, 2009-First-time home buyers who would otherwise qualify for the $8,000 tax credit, but don’t have the money for a down payment or closing fees, may now be able to get a loan to help cover those upfront costs.

The U.S. Department of Housing and Urban Development (HUD) announced on May 29 that the Federal Housing Administration (FHA) will allow state housing finance agencies to provide second mortgages “monetizing” the tax credit so that borrowers can use the funds toward their down payments and closing costs for the purchase of homes with FHA-insured mortgage loans.

http://rismedia.com/2009-06-10/fha-tax-credit-monetization-helps-home-buyers-with-upfront-costs/

…which means that some schmoe with no money (sound familiar?) can now buy a $228,571 house (especially if the seller “credits” the buyer money toward closing costs — a total scam!).

Essentially, anyone who wants to buy a home and can afford approximately $1,500-$1,700/mo. (guestimating) is able to do so.

This absolutely affects demand at the lower end, and consequently, at the price points above that, if there is any equity in the lower-end homes.

The termination of these horribly misguided govt give-aways cannot come soon enough.

[CA renter]

If FHA loans can be had with 3.5% down, and I believe the $8,000 tax credit can be monetized:

RISMEDIA, June 11, 2009-First-time home buyers who would otherwise qualify for the $8,000 tax credit, but don’t have the money for a down payment or closing fees, may now be able to get a loan to help cover those upfront costs.

The U.S. Department of Housing and Urban Development (HUD) announced on May 29 that the Federal Housing Administration (FHA) will allow state housing finance agencies to provide second mortgages “monetizing” the tax credit so that borrowers can use the funds toward their down payments and closing costs for the purchase of homes with FHA-insured mortgage loans.

http://rismedia.com/2009-06-10/fha-tax-credit-monetization-helps-home-buyers-with-upfront-costs/

…which means that some schmoe with no money (sound familiar?) can now buy a $228,571 house (especially if the seller “credits” the buyer money toward closing costs — a total scam!).

Essentially, anyone who wants to buy a home and can afford approximately $1,500-$1,700/mo. (guestimating) is able to do so.

This absolutely affects demand at the lower end, and consequently, at the price points above that, if there is any equity in the lower-end homes.

The termination of these horribly misguided govt give-aways cannot come soon enough.

[5yearwaiter]

[quote=ybitz]Does anyone know how the $8k federal first time home buyer credit boosts house prices by? In other words, all else being equal, how much should house price drop after the credit expires?

My thoughts:
Not all buyers qualify for the $8k credit. So the price boost we would expect to be less than if everyone qualifies.
The upside of $8k cashback to buyer is more than the downside of $8k increase in house price. Cash in hand now is worth more because of the time-valued worth of money, plus it amplifies how much they can borrow.

Just pulling numbers out of my ass, I think the $8k credit had boosted the price by $10k-$20k. Lower range for expensive houses (where the credit doesn’t help as much and fewer buyers in that category are first time home buyers), and near $20k for starter-homes because nearly all buyers qualify, and it boosts demand while keeping the supply curve the same. And we should expect a drop in house price after the tax credit expires.

What do you all think will happen after the tax credit expires?[/quote]

I have calculated how much this 8K is gonig to curse the new home buyer in case if future prices slide occurs (sure it is when interest rates bit increase and other real factors surfaced)- here is my calculation

Due to 8k RUSH there is some slow rise in SD home prices occured especially in the areas like 4s Ranch and all it shoots up around 25k to 40K depending on the house.

Due to 8K rush folks who buy is forgetting the 6% brokerage to pay when they want sell at that particular time – this costs around another 40K for houses to be around 650K range onwards

Due to this *k rush folks have to pay closing costs around another 8k(minimum)

When total all above factors I come up an estimated total of 69K to 80K is the amount one has to prepare to sacrifice in case if anything happens for the housing market and those needs to sell their house on those days. My question is will they get that house be appreciated that much 70K soon? – in market downtime or just 8k knocking them to 80K in the harsh times (well needless to say that equity 20% of price or more would also in trouble).

[5yearwaiter]

[quote=ybitz]Does anyone know how the $8k federal first time home buyer credit boosts house prices by? In other words, all else being equal, how much should house price drop after the credit expires?

My thoughts:
Not all buyers qualify for the $8k credit. So the price boost we would expect to be less than if everyone qualifies.
The upside of $8k cashback to buyer is more than the downside of $8k increase in house price. Cash in hand now is worth more because of the time-valued worth of money, plus it amplifies how much they can borrow.

Just pulling numbers out of my ass, I think the $8k credit had boosted the price by $10k-$20k. Lower range for expensive houses (where the credit doesn’t help as much and fewer buyers in that category are first time home buyers), and near $20k for starter-homes because nearly all buyers qualify, and it boosts demand while keeping the supply curve the same. And we should expect a drop in house price after the tax credit expires.

What do you all think will happen after the tax credit expires?[/quote]

I have calculated how much this 8K is gonig to curse the new home buyer in case if future prices slide occurs (sure it is when interest rates bit increase and other real factors surfaced)- here is my calculation

Due to 8k RUSH there is some slow rise in SD home prices occured especially in the areas like 4s Ranch and all it shoots up around 25k to 40K depending on the house.

Due to 8K rush folks who buy is forgetting the 6% brokerage to pay when they want sell at that particular time – this costs around another 40K for houses to be around 650K range onwards

Due to this *k rush folks have to pay closing costs around another 8k(minimum)

When total all above factors I come up an estimated total of 69K to 80K is the amount one has to prepare to sacrifice in case if anything happens for the housing market and those needs to sell their house on those days. My question is will they get that house be appreciated that much 70K soon? – in market downtime or just 8k knocking them to 80K in the harsh times (well needless to say that equity 20% of price or more would also in trouble).

[5yearwaiter]

[quote=ybitz]Does anyone know how the $8k federal first time home buyer credit boosts house prices by? In other words, all else being equal, how much should house price drop after the credit expires?

My thoughts:
Not all buyers qualify for the $8k credit. So the price boost we would expect to be less than if everyone qualifies.
The upside of $8k cashback to buyer is more than the downside of $8k increase in house price. Cash in hand now is worth more because of the time-valued worth of money, plus it amplifies how much they can borrow.

Just pulling numbers out of my ass, I think the $8k credit had boosted the price by $10k-$20k. Lower range for expensive houses (where the credit doesn’t help as much and fewer buyers in that category are first time home buyers), and near $20k for starter-homes because nearly all buyers qualify, and it boosts demand while keeping the supply curve the same. And we should expect a drop in house price after the tax credit expires.

What do you all think will happen after the tax credit expires?[/quote]

I have calculated how much this 8K is gonig to curse the new home buyer in case if future prices slide occurs (sure it is when interest rates bit increase and other real factors surfaced)- here is my calculation

Due to 8k RUSH there is some slow rise in SD home prices occured especially in the areas like 4s Ranch and all it shoots up around 25k to 40K depending on the house.

Due to 8K rush folks who buy is forgetting the 6% brokerage to pay when they want sell at that particular time – this costs around another 40K for houses to be around 650K range onwards

Due to this *k rush folks have to pay closing costs around another 8k(minimum)

When total all above factors I come up an estimated total of 69K to 80K is the amount one has to prepare to sacrifice in case if anything happens for the housing market and those needs to sell their house on those days. My question is will they get that house be appreciated that much 70K soon? – in market downtime or just 8k knocking them to 80K in the harsh times (well needless to say that equity 20% of price or more would also in trouble).

[5yearwaiter]

[quote=ybitz]Does anyone know how the $8k federal first time home buyer credit boosts house prices by? In other words, all else being equal, how much should house price drop after the credit expires?

My thoughts:
Not all buyers qualify for the $8k credit. So the price boost we would expect to be less than if everyone qualifies.
The upside of $8k cashback to buyer is more than the downside of $8k increase in house price. Cash in hand now is worth more because of the time-valued worth of money, plus it amplifies how much they can borrow.

Just pulling numbers out of my ass, I think the $8k credit had boosted the price by $10k-$20k. Lower range for expensive houses (where the credit doesn’t help as much and fewer buyers in that category are first time home buyers), and near $20k for starter-homes because nearly all buyers qualify, and it boosts demand while keeping the supply curve the same. And we should expect a drop in house price after the tax credit expires.

What do you all think will happen after the tax credit expires?[/quote]

I have calculated how much this 8K is gonig to curse the new home buyer in case if future prices slide occurs (sure it is when interest rates bit increase and other real factors surfaced)- here is my calculation

Due to 8k RUSH there is some slow rise in SD home prices occured especially in the areas like 4s Ranch and all it shoots up around 25k to 40K depending on the house.

Due to 8K rush folks who buy is forgetting the 6% brokerage to pay when they want sell at that particular time – this costs around another 40K for houses to be around 650K range onwards

Due to this *k rush folks have to pay closing costs around another 8k(minimum)

When total all above factors I come up an estimated total of 69K to 80K is the amount one has to prepare to sacrifice in case if anything happens for the housing market and those needs to sell their house on those days. My question is will they get that house be appreciated that much 70K soon? – in market downtime or just 8k knocking them to 80K in the harsh times (well needless to say that equity 20% of price or more would also in trouble).

[Author]

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