$10,000 for California homebuyers — Good or Bad?
Sacramento
If you set up a program to give away free money, would you be surprised if a large amount of people wanted to sign up for that program? Well, it seems a number of California legislators are surprised by how quick their hundred million dollar first time buyer program has been accepted.
The hundred million dollar cap on this program may be reached within another month or so. If you are interested in this program here are a few of the details: This is a tax credit that spreads across three years, in three equal payments and it only applies to new homes. One of the requirements is that the home has never been previously occupied. After purchase, it must be occupied by the taxpayer for a minimum of two years. It must be a single family residence, detached or attached, and the credit is $10,000, or 5% of the price, whichever is less.
This program was passed in February, at a time when the state of California is in essence, bankrupt. It is amazing that the state of California would set aside $100 million for such a program when many school districts, including San Diego, are having to cut music and physical education classes because of budget shortfalls.
With this hundred million dollar program almost totally allocated, guess what the bankrupt Sacramento legislators are considering? There are two new bills pending in Sacramento that would add an additional $200-$300,000,000 to this program. In my opinion the original bill was unconscionable, considering the state of the California economy. To double or triple the original giveaway is totally incomprehensible.
These actions should definitely earn California an award for the greatest “tax and spend” state in our short history. I question why this bill only applies to new homes. If the state of California really wanted to help out the real estate market, why wouldn’t this bill apply to any home purchase?
It may be cynical, but could it be this just applies to new homes because the California new home builders contribute millions to the reelection campaigns of our state legislators? What would be extremely interesting, would be to look at the public record in one year from now to see how many state legislators who backed this program, received campaign contributions from new home builders.
For California homebuyers, especially first-time buyers, that qualify for the federal $8,000 credit as well as the California $10,000 credit, this is a great deal. But, is it really fair that tax payers are picking up the tab? Would it not make common sense if California wanted to pass such a program, to have it apply to all home purchases in order to reduce the current oversupply of existing homes? This program is doing nothing to lessen the supply of existing homes, vacant homes and bank foreclosures.
With this California new buyer’s credit, the pending new bills to escalate the funding, the recent extension of the foreclosure process by 90 days, and last year’s extension of foreclosures by another 30 days, one can see that California legislators are hell-bent in meddling in the real estate industry. I’d much rather see them finally pass a credible budget, before dreaming up new programs to give away taxpayer money.