You may know a first-time home buyer who received an $8,000 cash incentive from the Feds. Sure, it sounded good at the time, and the rhetoric coming from the Housing Secretary, various state and local real estate gurus, and a host of economists touting the plan as “the way” to help not only the actual home buyers, but also the economic recovery. Well, it’s seems that has proved even more costly for the home buyers/cash incentive recipients than for taxpayers, according to housing data just released. A typical first-time home buyer has now lost twice as much to actual home price declines as they received from the federal incentive program.
The problem is the exact opposite market action occurred which is in direct contradiction to what the Feds were spouting when they launched the incentive program. A median home value fell to approximately $170,000 in March, down from $185,000 just a year ago according to the real estate site Zillow.com. In reality, this means that a buyer who closed on a house before the tax-credit program expired in April 2010 and collected $8,000 has now lost about $15,000 in the value of their home. The really fortunate ones who purchased their homes at the very onset of the program have fared far worse. The median price of homes purchased during that timeframe has dropped an average of $20,000.
If the Feds keep coming up with these “can’t lost” programs for consumers they won’t have to be concerned about figuring out who’s rich and who isn’t because a lot of these folks will start doing what others did a year ago, simply walking away from their under water homes and we’ll be right back to square one in the housing market dilemma….