Archive for April, 2009

real estate taxes doing what needs to be done to stimulate the economy?

Monday, April 20th, 2009

This article talks about how the new 10% tax incentive (up to $8,000 max) makes it a good time to buy a first home.

That’s from now until Nov. 30 or Dec.1 depending on which newspaper article you believe. In the article linked above, one couple amended their 2008 return and are expecting a check in a few weeks. They say that needs to be done by April 15th so I guess now you’d have to wait till you pay your 2009 taxes.

Anyway, this article says things might be working and real estate may be ready to lead a US economic recovery. It’s possible but I’m not sold that we’re in a recovery right now.

Is a low housing start number in this housing market is a bad thing?

Thursday, April 16th, 2009

We’re looking for “green shoots” in areas that got us into trouble in the first place – excessive consumption, mis-allocated capital, and a trading mentality. We’re celebrating firms like Goldman and JP Morgan because they made good trading gains while credit to the real economy continues to be cut.

If you believe like the Administration and Wall Street that we’ve got a “confidence” problem, then growing housing starts indicates improvement. If you that we have a structural problem with the economy, then a drop in building over-supplied assets is actually good news.

Lower housing prices can be a good thing because it means that workers can prosper at lower compensation levels, which means that we can start regaining cost advantages relative to our trading partners and taking back industry lost as well as creating new industry. All it would take would be to let the zombies on Wall Street go under.

Vacation home sales are off but for how long?

Thursday, April 16th, 2009

This article talks about how vacation home sales are on the decline and how prices are coming down. But the conclusion is that retiring baby boomers will start buying vacation homes and retiring in them.

I know a few retiring baby boomers, and some bought a place near Disney that could be considered a vacation home by some but most of the ones I know prefer to stay near their friends / kids. So I’m not convinced that baby boomers will be driving the market in places like Costa Rica.

There’s also a personal finaince lesson here. One that I’ve mentioned about saving for unforseen medical expenses (because you can’t trust the insurance companies) and one that I shouldn’t have to mention about interest only mortgages:

But so far, no buyers. While she has dropped her price on the property, with its rambling five bedrooms and nearby rain forest, from $2.35 million to $1.5 million, she is experiencing firsthand just how dismal the market has become for vacation homes. She has enough money to pay her interest-only mortgage of $3,800 through July, but after that, there are no funds left.

She decided to sell the property because of unforeseen financial problems, such as medical expenses. “We’re about to lose it to the bank.”