With Nov 30th approaching fast and the final date to be eligible for the very successful $8000 first-time home buyer rebate. I personally don’t think that there is any doubt that this program will be extended.
This is one of the only things that the Real Estate market has going for it right now, and to not extend it, would set the housing market back substantially. This is the last thing that policymakers want.
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Moving into 2010, this economy is not ready for the end of the government back stops, which has lead to the rally in the stock market, and the break from the
recession which will probably be just that, a break.
The rebate program may look a little different 2010, in fact before it was an $8000 refundable credit; it was a $7500 interest free loan. It could be lowered below $8000, and I doubt that it will be extended to higher income people who the realtor associations continue to lobby hard for.
With foreclosures at all time highs and probably not peaking until 2010, the US government has come to resemble one of those bad brokers who really doesn’t care too much about the rates of returns he gets his clients, because he has a plan to get more clients.
As long as the Government can keep people buying homes, it eases the blow from all the foreclosures.
The crash in Real Estate has definitely subsided, but the housing problem is definitely here to stay for a while. As long as there is a deficit in job creation, it is hard to get too optimistic about the housing market. Long-term all of this should pass, but how long can the government go on subsidising this market?
The irony in all of this is that the IRS code is already filled with massive amounts of tax deductions for home ownership, which is one of the major contributing factors to the current economic crisis. In addition, it is also a big contributing factor to the lack of entrepreneurship in the US (which is needed for job creation).
Most Americans are very comfortable with the formula: get a job with an established company with a pension and then buy a home. They feel that everything else takes care of itself.
This strategy was fine for most of the 20th century, but will not work in the 21st century global economy.
The bottom line is that the housing market has been front and center of the entire economic crisis and will continue to be a strong barometer of where we are at. As long as the Government is the back stop for this market, it will be the back stop for the entire economy,
This real estate market is nowhere near ready to support itself, and neither is this economy.
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