Move and the Economy Moves Too

As part of the American Recovery and Reinvestment Act of 2009, between January 1 and November 30, 2009, qualified first-time home buyers are eligible for tax credits of 10% of the home’s purchase price, with an $8,000 limit, through the filing of an income tax return.

According to the Treasury Department, through August approximately 314,000 buyers had bought into the program at an estimated $154-million in credits. The National Association of Home Builders (NAHB) and the National Association of Realtors (NAR) anticipate final figures will show over 1.5 millions homes sold, at a total cost of about $15 billion. The NAR estimates that only 350,000 homes, or 23%, will be directly attributed to the program incentives, claiming others would have made the purchase regardless.

With time running out, on June 12, Senator Johnny Isakson (R-Georgia) introduced legislation to not only extend the tax credits but up the ante to $15,000 to any homebuyer, plus eliminate income caps of $75,000 for individuals/$150,000 for couples. It has bipartisan support, including Senators Chris Dodd (D-CT), Joe Lieberman (ID-CT) and Senator Bob Corker (R-Tennessee).

From the words of Sen. Isakson, “In the mid-1970’s when America faced a similar housing crisis following a period of easy credit and loose underwriting that flooded the market with new construction and a three-year supply of vacant homes, Congress responded by passing a $2,000 ($8,000 in 2009 dollars) tax credit for anyone purchasing a new home for their principal residence. The results from that tax credit were clear and swift as home values stabilized, housing inventory dropped and the market recovered.”

The projected cost, adding to national debt, would be $50 to $100 billion. It’s a relatively small price to pay considering the hundreds of billion of dollars that were chucked out to stave off the failings of large scale banking institutions. The little guy deserves a good slice of the stimulus pie. Unlike the big, bad banks, consumers would be less likely to hoard their moneys.

I’m all for it. This could be the deciding factor in following through on an anticipated move to where there are “42,145 square miles of scenic beauty” in the Smoky Mountains. Think of me as a future right-wing, gun-totin’ Second Amendment Patriot of The Volunteer State. Seriously.

As reported by the U.S. Census Bureau, there were 18.7 million unsold homes in the U.S. at the end of the second quarter, a slight increase from the 18.6 million homes a year earlier. Representing a full 14% of the total 130.8 million homes in the U.S., at the current sales rate it would take 9.4 months to sell those homes and get them off the market.

With Alt-A and Option ARM mortgages due to balloon over the next three years, this recession is set to inch ever closer to something worse than a recession. It’s too late to cushion the blowout from these toxic loans that, at over $2.75-trillion, are more than double the mess caused from sub-prime loans.

Steps must be taken to keep people in their homes and move others into vacant homes. Going forward, lax lending practices must be avoided through strong regulatory oversight. The slight of information from applicants must be tamped by prohibiting further use of an automated loan process that avoided the review of income and assets.

Since the glut of unsold homes puts in doubt a surge of new-home construction anytime in the foreseeable future, incentives would give realtors, our masters of property investments, something to cheer about in the meantime, snuggly sandwiched between buyers and sellers and giving everyone that warm, fuzzy feeling of home sweet home.

Hopefully a temporary setback to a growing population, America has largely lost its means of being a mobile society. People are stuck in the humdrums of doing too much of nothing, driven to levels of complacency that may have long-lasting affects on its place in the cutting edges of the new world order.

There are plenty of positive prospects for the redistribution of the population and the limited wealth that some have managed to cling on to. Many realize they must downsize, thus having extra cash that will bolster local businesses as they make the best of their home investments with remodeling, upgrades and purchases of new home furnishings.

A number of little sparks across the nation would light a brighter future for small and mid-size businesses; a stimulating lifeline toward a prosperous tomorrow – job creation. As people begin to once again earn wages, the momentum will help grow the economy sooner than any other government program imaginable.

A move from one region to another necessitates a wardrobe change; southerners going north will need seasonal apparel, northerners heading south would shed layers of winter cloths for shorts, swim suits, year-round tank tops, sandals, beach towels and suntan lotions as they lounge beneath their hammocks and large beach umbrellas.

What would this hold for Florida? Between the springs of 2008 and 2009 the state population declined by 58,294 – no doubt, bad news. But, as some leave, others would see this as an opportunity to head south, especially retirees who have tired weeks upon weeks of cold and freezing temperatures under gloomy, overcast skies.

According to a report issued by a 2008 CDC report, in 2005 the life expectancy for those over the age of 65 suggests retirees could spend another 18 years (16 male, 19 female) in the Sunshine State making new friends in the vast number of retirement communities.

The best of all bets is that first-time home buyers who already have the funds for a down payment will finally own a piece of the American dream and take hundreds of thousands of unoccupied homes off the housing market. To affectively move large numbers of people into new homes, giving incentives to all prospective homebuyers, new and existing alike, is a necessity. As a compromise new homebuyers could be offered the full $15,000 incentive package while existing homeowners given the offering of $8,000.

I’m all for it. This could be the deciding factor in following through on an anticipated move to where there are “42,145 square miles of scenic beauty” in the Smoky Mountains. Think of me as a future right-wing, gun-totin’ Second Amendment Patriot of The Volunteer State. Seriously.