As the, so far, jobless recovery continues, the White House is reportedly hunkered down trying to figure out what to do next. Obama administration officials are taking note of programs that have worked and those that have not done as well.
Among the programs that apparently fall into the “success” column is the $8,000 tax credit for first time home buyers.
The tax credit for first timers was part of the $787 billion dollar stimulus program and is being credited with helping the real estate industry stage a modest comeback—at least among first time home buyers.
All indications are that the tax credits will be continued well into 2010 and maybe beyond. Some legislators have even suggested that the credit amount be increased to help sales in places such as coastal California, where home prices tend to be much higher than in many other parts of the nation.
While helping first time buyers is great, we are still struggling with what to do with current home owners who cannot afford their mortgages and face foreclosure…still a growing problem.
With the unemployment rate expected to only get higher in the months ahead, and with thousands upon thousands of mortgages on the verge of resetting soon at much higher rates, no real recovery in the real estate market is likely until the foreclosure problem is dealt with more effectively than it has been. And, so far, it hasn’t been dealt with effectively at all.
The president still is resisting going to bat for a change in bankruptcy law that would allow judges to adjust mortgages–something he strongly advocated as a candidate.
And, despite some self congratulating newspaper ads, most major banks have been loath to adjust homeowners’ mortgages by any method other than reducing interest while leaving principal alone. Not a good way to go about this, many economists argue.
Helping lots of first timers buy a home while allowing countless current homeowners to be booted from their properties makes little sense…politically or economically.