Is Real Estate Driving Down The Road Of The Car Business?
November 16th, 2009 categories: Rants & Riffs, The Market
Because I am a Honolulu Realtor, I am happy about the extension of the tax credits for purchasing a Honolulu home as your personal residence. As a citizen of the United States, I am concerned that we could be sending part of the house sale and purchase business the way of the car sales business. Let me explain.
Increasingly, it has become necessary for automakers to offer incentives in order to sell their cars. I am afraid that by having the government offering tax credits to lure buyers to buy, we may be setting up a situation where first time buyers could hold back until new tax incentives are offered. Let’s be clear, a home to live in is not a car. Here are three reasons that make buying a home worth doing without cajoling or economic bribes.
1. Honolulu real estate will generally appreciate over the mid to long-term. Cars are worth less the second you drive off the lot. I am selling a 3 year-old car for half of what I paid for it. In general, if someone bought a condo or house 10 years ago in Honolulu, it is worth significantly more than they paid for it in 1999.
2. You can hitchhike or take the bus if you can’t afford a car, but you have to live somewhere. Unless you are homeless you are either paying rent or a mortgage, why not pay for your own home instead of someone person’s mortgage.
3. Psychic rewards. Regardless of the economic benefits of homeownership, there are personal and peer related rewards from owing a home. Personally, you have the pride of being able to say you own your humble abode and you don’t have to say you are “renting”. Whether you like it or not, being a homeowner puts you in higher social strata than if you are “just renting”. Since perception is reality, homeownership could have untold benefits with friends, co-workers and bosses.
Needless to say, because of my Realtor “spots” I am hugely biased toward people owning versus renting. I think that is it is nice that the government offers to help people get into properties, but I would rather see the real estate market stand on its own two feet.
If you are interested in an overview of the renewed government incentive program, below is a quote and link to a recent Wall Street Journal article.
“The new law extends the tax credit for first-time home buyers and opens it up to some existing homeowners as well: The credit is now up to $8,000 for first-time buyers and up to $6,500 for repeat buyers. All buyers must have a binding contract on a house in place on or before April 30. The purchase must be for a principal residence and must close on or before June 30.” CLICK HERE TO READ THE ENTIRE WALL STREET JOURNAL ARTICLE
If you would like to discuss your real estate needs, feel free to call me at 808-737-2093 or toll free at 877-737-2093. You can email me at keahi@lava.net.
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