The Stimulus is Working

If all politics is local, so is much of economics. This picture is worth 1000 words.


Thanks to the $8,000 first-time buyer tax credit, the house across the street has sold after being vacant for more than a year. Better yet, the house next to it has also sold after also sitting vacant for more than a year. Both were sold to young, first-time home buyers who could use help with a downpayment but could move quickly because they did not have to sell a house to make the move.

Even better, my parents home finally sold after being empty for about 18 months. It also was bought by a first-time buyer. Like the two cases on our street, the seller cut the price significantly to get rid of the property, having long since moved to another place with its own expenses, so this does not signify any recovery in the price part of the market - but it has meant work for roofers, maintenance people, surveyors, and actual real income for realtors.

Along with one other sale about a block away, all of the properties up for sale in our immediate neighborhood are "gone" - and none of them were converted to rentals. That last part is a double bonus of the stimulus plan. With prices down, people with cash can pick up potential rental properties at a song. (One house on my drive to work went from "sold" to "for rent" in one day, but it is closer to the colleges.) This plan puts an owner in the house, which is a big plus for everyone around us.

So this part of the stimulus bill is working well. The only difference between it and the "cash for clunkers" program is that it isn't using appropriated dollars so there is nothing for the Republicans to complain about yet. It remains to be seen if they will complain about having to subsidize a TAX CUT for new homebuyers in the same way they criticize a rebate for people replacing a 14 mpg truck (SUV) with a 28 mpg car that will cut each individual's demand for foreign oil in half!

Any bets?