But I’m not posting that today…

Instead I am going to talk about the Stimulus Bill and why it really isn’t a good idea for real estate…

• Massive Government borrowing leads to tighter credit markets.  Tighter credit markets lead to higher rates for other borrowers.  That means that the Stimulus Plan could increase costs for borrowers.
• The proposed $15,000 tax credit for buyers would lead to a short term bump in home sales, but it I don’t think it would lead to a long term housing recovery.  At some point the tax credit goes away… and after that the bump is over unless the landscape has changed.
• And according to the CBO (Congressional Budget Office), the landscape won’t be changed by the Stimulus Plan.  In fact, they have projected a medium and long term negative impact on the economy, compared to doing nothing.  Lower GDP (Gross Domestic Product) and limited job growth because of the damage from massive borrowing.

So, I’m not a fan.  I want things to turn around.  I want to see unemployment drop back down to the levels of a couple of years ago.  I want to see a healthy economy and real estate market.  But it has to be real. Tt has to be based on the realities of the market.

If it is going to be (and I assume it is going to be signed before long… but larger than either the House or Senate versions), I hope it works as planned.  But I don’t expect it.

If you are a buyer, there is a two edged sword.  This plan could actually further depress prices in the longer term, but those price declines might be countered with tighter credit, higher borrowing costs and increased requirements for down-payment and appraised value.

Don’t hesitate to shoot Lane a message if you have any questions, or need any help. And check out the new links for FREE Property Searching, FREE Comparative Market Analysis and FREE Market Reports. They are near the top of the page…