Why big government

[veritas]

hurts us.

http://www.smartmoney.com/spend/real-estate/how-the-8000-tax-credit-cost-home-buyers-15000-1304981110838/?zone=intromessage

[erchess]

Two Points

First, if I owned a rental home and I could not rent it for what the mortgage payments were or would have been if I had had a mortgage plus taxes repairs, all other costs of ownership, the rate of inflation and a profit, would I not be expected to dump it on the market and invest the proceeds in something else? Would not this landlord behavior lock in a certain relationship between the rent and the mortgage payment on a given property? I'm just not sure I believe that homes in the aggregate could ever be a better buy to rent than to own.

Another little point - homes were bought that would not have been without this subsidy. How can it be said that the experiment failed? The economy is slowly coming around - who is to say that we're not better off than we would be if this program had not existed? Sure housing prices are going down but they will come back up in time, and from the point of view of society, what's the problem?

[joanmcq]

One of the commenters made a good point in that a primary residence should not be viewed in terms of short term fluctuations, and you should not be buying a home unless you are planning to live there. The 'rent vs. buy' equation should take into a lot of factors and whether the price will rise or over inflation, or a tax credit/deduction should not be the deciding factor. More important is, 'can you afford it? are you planning on staying put for the next XX amount of years? If something happens (you need to move for a job), can you rent it for at least a break even cash flow? If so, do you want to be a landlord?

Now if you are buying a rental, as I have, the question of cash flow is the most important. Negative cash flow? Not a good investment.

The question of buying now vs later (market decrease after government incentive is gone) depends on whether you have the cash...the incentive put cash in people's pockets to do repairs, upgrades, buy other stuff, etc., where a 7K drop in price after you factor in a 30 year mortgage is negligible in it's effect on the out of pocket monthly expense.