It's Back: California’s $10,000 Homebuyer Tax Credit Returns'/>

March 26, 2010

He's It's Back: California’s $10,000 Homebuyer Tax Credit Returns

An effective $200 million extension and expansion of last year's oversubscribed $10,000 homebuyer tax credit incentive, California Assembly Bill 183 was signed into law by Governor Schwarzenegger yesterday.

The new law allocates $100 million in credits for buyers of new homes (a previous requirement) and $100 million in credits for first-time buyers of existing homes (a new twist) purchased between May 1, 2010 and August 1, 2011 (or until the coffers run dry).

California $10,000 Tax Credit Pool For New Home Buyers Closed July 3 [SocketSite]
California Assembly Bill 183 [ca.gov]

First Published: March 26, 2010 8:00 AM

Comments from "Plugged In" Readers

"until the coffers run dry"

good one :-)

Posted by: dub dub at March 26, 2010 8:15 AM

A ponzi scheme requires a constant supply of new investors.

The politically acceptable price declines are 6-8% per year. However, a collapse in sales like we are seeing now usually portends a much larger collapse in prices, so they had to do something. The actions have reactions that ultimately pull prices down lower than they would have gone, but it slows the decline in the short term.

Governments everywhere are running out of money, so the price-destructive actions won't continue forever.

All this japanese behavior puts me in the mood for sushi.

Posted by: tipster at March 26, 2010 8:23 AM

The new/existing requirements are stupid.

Oh well, if any first time buyers take the bait, they'll just be driving down rents by creating more rental vacancies.

Posted by: J at March 26, 2010 8:26 AM

This program reeks of flop sweat.

Posted by: anon at March 26, 2010 8:45 AM

I notice it begins just as the Fed program ends. What would be better would be for the two programs to run concurrently, but that would require thinking, coordination and planning in Sacramento.

Not likely in my lifetime

Posted by: Mystery Realtor at March 26, 2010 8:55 AM

More welfare for "homeowners" in our wonderful version of crony capitalism.

It's not even effective welfare. At least with traditional welfare, food stamps and minimum monthly cash payments, it serves to actually stimulate the economy and serves to provide a basic necessity.

This welfare payment is a huge waste--it will only encourage a handful of extra sales and is meant to help the bankers and not real people. The federal program spent $100,000 to add one single home sale: http://www.calculatedriskblog.com/2010/03/very-expensive-home-buyer-tax-credit.html.

All this to give deadbeat loser bankers a lifeline. The realtors are happy too. More senseless welfare for a bubble asset that they get to live off of like parasites.

We live in a broken society.

Posted by: SFHawkguy at March 26, 2010 8:57 AM

"What would be better would be for the two programs to run concurrently, but that would require thinking, coordination and planning in Sacramento."

What a mystery. A realtor wants to expand the home buyers credit. Let's triple it! To the moon!

These parasites don't even worry about keeping the host alive. They are simply greedy pump monkeys. Blindly pumping an asset and fleecing people. What value do you add? Pumping a property to the moon? Providing the lies to justify the next sucker losing his "investment"?

You're even biting the hand that feeds you. Sacramento can't do anything except give you realtors more welfare and still you complain.

Parasites bleeding California dry.

Posted by: SFHawkguy at March 26, 2010 9:07 AM

What do you contribute to California, especially, that makes you so entitled as to speak that way, Hawkguy?

Posted by: anonn at March 26, 2010 9:19 AM

Dont worry, our president has the money to spend. He just pumped us up to 90% of GDP.

http://www.washingtontimes.com/news/2010/mar/26/cbos-2020-vision-debt-will-rise-to-90-of-gdp/

Many people don't get it. When there is a crowd of people (mob mentality) expecting the government to pay them, just for being, they will always vote in the same people, and they will always get paid. Those that are more responsible, get screwed. I saw an article the other day about a guy who was complaining about his healthcare insurance costs, something about his $2000 deductible. He said it was too much, because he has cable, internet, cell phone, car payments, and other expenses to pay, and he said he is so happy for the new healthcare reform, because it means he will have more money to spend. When you have that kind of mentality - i.e. that someone else will take care of you and be responsible for you - then laws such as the one signed by the Gov. continue to happen. Healthcare is just one example, but look how complicated the tax code is, and how these types of programs have been multiplying over the past 20 years.

Posted by: Mr. Jones at March 26, 2010 9:28 AM

Anonn,

Well, my client's don't get a welfare check to purchase the product I'm selling. They don't get a substantial tax deduction for the financing they use to purchase the product I sell. My client's don't have the government guarantee the loans they use to buy my products.

And, I pay the taxes that go into your welfare payments.

So that's one reason I'm concerned. And I'm concerned because a crony capitalist economy is not sustainable. Unlike you realtors I would like a system that benefits all Americans and Californians. The only people bubble housing prices help are the bankers and the realtors and the suckers that paid too much for their homes the last 10 years. It's bad for the rest of society to pay bubble prices for housing.

The government has made sure we pay too much for housing and you are a beneficiary of this inefficiency.

The word parasite is apropos under the circumstances.

Posted by: SFHawkguy at March 26, 2010 9:36 AM

As you well know, from the thousands of posts breaking down real costs on here, even with these credits it's not all free and easy. And despite all of it the bottom line for local government is that realtors put people into properties. These properties generate a tremendous amount of local revenue vis a vis transfer taxes and property taxes. Whether or not you like it, that's one reason that realtors get treated with kid gloves by California. I don't agree with griping about biting the hand that feeds, here, tho. This 10K credit is a boon to my clients and I know it.

As far as crony capitalist America is concerned, when hasn't America been crony capitalist? Hamilton was a crony capitalist.

Posted by: anonn at March 26, 2010 9:45 AM

how do the process of getting the tax credit work. is the state going to send me a cheque for 10k or do i need to wait for the next time i file taxes to offset my state taxes with the 10k credit (which i don't pay even pay 10k in state taxes).

Posted by: condoshopper at March 26, 2010 9:53 AM

i think it's kinda ridiculous to spend money like this with teachers getting laid off left and right and our schools falling apart.

that said, anyone know whether there is an income cap to qualify for this? i took a scan of the text and didn't see any. the federal credit definitely had an income cap and i find it hard to believe the california bill wouldn't. but again, i didn't see it anywhere. would appreciate any input.

Posted by: melon at March 26, 2010 9:56 AM

Hoo, I'd love to meet the schmuck who would actually be motivated by this. This is just more confirming evidence that the pyramid continues to crumble. Otherwise, you wouldn't need it. You get $3,333 a year for 3 years to buy an asset that will decline in value by many multiples of that each year. Just wait until the ponzi unwinds a but more and buy at the steep discount that will wipe out this credit by a factor of 10 even for a modest place. But this may result in a handful of additional sales in SF for the few months it is in effect. There's one born every minute.

Here is a recent sale that almost got to the 50% discount level -- from 2005!

http://www.redfin.com/CA/San-Francisco/250-King-St-94107/unit-476/home/22898682

Many more where that came from. Economy and unemployment continue to stagnate.

Posted by: A.T. at March 26, 2010 10:04 AM

Throwing money at things like housing, teachers, etc., doesn't solve anything. Its easy to sign a law giving money, its impossible to make sure it serves its intended purpose (i.e. helping the housing market or improving schools), and it almost never does.

Posted by: Mr. Jones at March 26, 2010 10:06 AM

UPDATE: A link to the history and full text of AB 183 has been added above.

Posted by: SocketSite at March 26, 2010 10:13 AM

Hoo, I'd love to meet the schmuck who would actually be motivated by this. This is just more confirming evidence that the pyramid continues to crumble. Otherwise, you wouldn't need it.

I just put somebody in escrow on something that will net him well over 250K when he ultimately sells it. If you met him you'd probably say, "What a smart guy." You panning every single thing -- saying everything will decline in value over the next few years? That's what's dumb.

Posted by: anonn at March 26, 2010 10:14 AM

anonn, should have told your buyer to wait until May 1 so he could have gotten this $10,000 on top of his guaranteed $250,000.

By the way, I just counseled an office-mate not to buy a place that would have netted him at least a $250,000 loss when he wanted to sell it. But he will also miss out on the $10,000, so make it a $240,000 instant net gain. Not a bad day's work.

Posted by: A.T. at March 26, 2010 10:22 AM

Thank goodness the state government found something productive to do with the surplus. I was afraid they'd just invest it in treasuries.

Posted by: D at March 26, 2010 10:37 AM

I just put somebody in escrow on something that will net him well over 250K when he ultimately sells it.

What a steaming pile of runny brown refuse.

To casually bank with such absolute certainty hypothetical future profits is to peddle in something that should be picked up, tied off in a plastic bag, and deposited in a trash bin.

Posted by: Debtpocalypse at March 26, 2010 10:49 AM

Thank goodness the state government found something productive to do with the surplus. I was afraid they'd just invest it in treasuries.

Posted by: D at March 26, 2010 10:52 AM

This will not affect SF at all. Just like Fed $6500 or $8000 didn't help SF market...

Posted by: SFwatcher at March 26, 2010 10:58 AM

It appears you have 35 days to get both the $8k and $10k credits IF you haven't owned a principal residence in the past 3 years. Details in my link.

California is $3333 per year only applied to you CA taxes. No rebate if you have less in CA taxes.

Posted by: SFisHOME at March 26, 2010 10:59 AM

Thanks SFisHOME!

Posted by: condoshopper at March 26, 2010 11:09 AM

To casually bank with such absolute certainty hypothetical future profits is to peddle in something that should be picked up, tied off in a plastic bag, and deposited in a trash bin

The only thing casual about the process was the way I mentioned it, and actually rounded it down. Gee whiz. How do you really feel about all things SF R.E, debtpocalypse? I didn't quite gather it from the fetid groupthink socketspew you just puked onto my computer screen.

anonn, should have told your buyer to wait until May 1 so he could have gotten this $10,000 on top of his guaranteed $250,000

Oh, we'll close after May 1, and he'll get his credit. Don't worry.

Posted by: anonn at March 26, 2010 11:26 AM

Do you know what's funny? Like, funny, odd? Not the funny-ha-ha funny [Removed by Editor]. No, like, do you know what's funny weird?

I'll tell you. It's the masquerade of a bunch of groupthinkers posing as critical thinkers that occurs here daily. You've all bought into one thing. And you all twist and turn your same little brand of same in order to encompass every single thing that comes down the pike.

Like, take AT's "I'd love to meet the shmuck who blah blah blah" statement. A true critical thinker would object to someone trying to paint a wide ranging and ultimately not knowable series of future occurrences in certain terms. How can he say that everybody who buys within this range will certainly buy an asset that declines every year? He cannot say that. Not logically. Good buys are made in every market. Even the biggest r.e. basher would know that to be true.

Instead you focus your energy on me. Someone speaking about something specific. If you know my posts on here, you know that I know local values very well for SFRs within a range of about 4M and down. I've proven it time and time again. I've also mentioned that when I or clients of mine buy something for development, future price shifts are baked into the equation. So, someone who knows the commodity and anticipates negative eventuality versus someone who unilaterally says everything is going to do a certain thing. Where do you focus your critiques?

You focus them, ironically, on the individual with specific knowledge about a specific situation. And not the individual who is categorically talking about hundreds of things he or she will never even vett.

A couple years ago there were a bunch of haters on here with interesting things to say, and well reasoned arguments. Now it's a bunch of haters riffing on the same things with slight variations of unfocus.

I'll leave you with another. Good buys are often found when not everybody is capable of buying. You think FHAs are buying total fixers these days? The statements a lot of you make on here leaves me wondering. Why are you here? You're never going to do a single in SF R.E., and that much is obvious.

Posted by: anonn at March 26, 2010 12:17 PM

Annon says go long while A.T. says go short. At some point in the future, both will be proved right and both will be proved wrong depending on what point in time you do the freeze frame. Fundamentals don't always come through.

In the late 1990's, I was so absolutely convinced that at 4x book value and 20x 10 year projected earning, Amazon was rediculously expensive. I pulled a naked short at $110 only to watch it run up to over $300 in less than a month and covered at $310. My buddy who went long instead, made a huge killing and used part of the gain to buy a lovely beach front home on the Big Island. I made the right call but simply couldn't stomach the incredible loss. Had I stayed the course, I would have been vindicated within 18 months. My friend who held on a large portion of the portfolio lost almost all of it by 2000.

Posted by: Outsider at March 26, 2010 12:25 PM

Hey annon,

Not trying to be snarky, but seriously, how did you determine your client will net $250k? What assumption did you make? Break it down for us.

Posted by: satchelfan at March 26, 2010 12:29 PM

Gee, anonn, you're right. The realtor cheerleaders are the only true critical thinkers on this site. Guaranteed $250,000 gains and all. Nothing cliche about that kind of talk. Here, to prove that I got one wrong, I found this recent sale in Telegraph Hill showing a 20% gain!

http://www.redfin.com/CA/San-Francisco/1407-Montgomery-St-94133/unit-3/home/1952394

Oh, but that's since 1998.

Posted by: A.T. at March 26, 2010 12:31 PM

This client is buying a fixer. He's going to invest 300K worth of capital into it. In today's market the resulting property will be worth around 900K more than the purchase price. I picked 250K because that's the tax free gain after two years.

Posted by: anonn at March 26, 2010 12:42 PM

This client is buying a fixer. He's going to invest 300K worth of capital into it. In today's market the resulting property will be worth around 900K more than the purchase price. I picked 250K because that's the tax free gain after two years.

And this "defense" is what makes you a certified crap-peddler.

Because he isn't selling tomorrow's property in your estimation of "today's market."

Which is obvious to anyone who can fog a mirror.

Posted by: Debtpocalypse at March 26, 2010 12:53 PM

My favorite quote applicable in this context.

It is difficult to get a man to understand something, when his salary depends upon his not understanding it!

- Upton Sinclair

Posted by: lol at March 26, 2010 1:00 PM

"This client is buying a fixer. He's going to invest 300K worth of capital into it. In today's market the resulting property will be worth around 900K more than the purchase price."

Excellent! We can always use improved housing stock. Especially when it's on someone else's dime.

Posted by: diemos at March 26, 2010 1:29 PM

I find it interesting that with all of California's budget problems they chose to pass this.

CA budget is the height of insanity. Default anyone?

not sure how much it will affect SF's market, but it certainly won't hurt SF's market. It will likely make a little bit of difference, just like all of these stimulus gimmicks.

Posted by: ex SF-er at March 26, 2010 2:44 PM

I don't understand why snarky things stand that aren't even built upon things actually said. AT is talking about "realtors are critical thinkers." As if anonn = every realtor. debtpocalypse is talking about "selling tomorrow" when the point wasn't selling, but losing value. Somehow I guaranteed something. lol is quoting something from somewhere, because he knows how to use wikipedia, it seems. It's all pretty weird who gets to put words in whose mouth and who doesn't around here. LOL.

Posted by: anonn at March 26, 2010 3:12 PM

Ex-SFer - All I can figure is that Sacramento passed this because they feel that costs will be recovered by maintaining or increasing the property tax basis. It might actually work for the next coupla years. But as we all know this just simply defers the problem in the long run.

Posted by: The Milkshake of Despair at March 26, 2010 3:15 PM

^ Or maybe those NAR dues are actually worth something.

Posted by: diemos at March 26, 2010 3:21 PM

Ex-SFer - maybe the reason California has budget problems is that the legislature passes things like this.

Posted by: salarywoman at March 26, 2010 9:25 PM

This client is buying ...(Translation: KaCHING! I, the Realtor, get a commission!)...a fixer. He's going to invest 300K worth of capital into it (Translation: KaCHING! My Dad's a contractor! I told this sucker I knew a guy who could fix this POS up real nice. My dad gets the $300K!)...In today's market the resulting property will be worth around 900K more than the purchase price. (Translation: Splat. The idiot 2005-2009 buyers who actually believed us Realtors and our "Instant Ekwity" BS are BEGGING Obama and Arnie for a hand out, actually, multiple hand outs, just to stay afloat. I can't friggin' believe I found the last guy on the face of the earth who would still believe that, but apparently, I did!)"

Posted by: tipster at March 26, 2010 11:58 PM

I guess I would be offended if you weren't so childish any more. 11:58 p.m., and that's what you said on a Friday night. What a life you must lead.

Posted by: anonn at March 27, 2010 8:13 AM

Also, my dad is not a contractor. My brother is a contractor. But not my dad. My dad is a robot ninja from outer space. Does that excite your 11 year old mind, Tipster? Now go pretend some adventures with your Transformers before the cartoons come on.

Posted by: anonn at March 27, 2010 8:26 AM

People that buy expecting a $3333 state tax refund for 3 years will be sorely disappointed when they get an IOU instead of a check.

Posted by: OneEyedMan at March 29, 2010 8:47 AM

I'll take the whole 10K in the first year please.

Posted by: Cole Valley Attorney at May 12, 2010 6:13 PM

OneEyedMan wrote:

People that buy expecting a $3333 state tax refund for 3 years will be sorely disappointed when they get an IOU instead of a check.
I realize OneEyedMan was making a joke, but unless I really needed the money in hand, I'd take the IOU and be reasonably happy, because they were yielding 3.75% last year and presumably if you got one at any point in the next three years, you'd get even more yield. And that's without taking into account the fact that they are exempt from federal and state income taxes.

That blows short-term T-bills out of the water.

Posted by: Brahma (incensed renter) at May 13, 2010 2:35 PM

The $100M pot for 1st time buyers of existing homes -- most of those eligible for SF purchases -- is probably just about exhausted. Better hurry. The pot for new home buyers will last longer.

Posted by: A.T. at May 13, 2010 2:52 PM

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