The Federal Housing Credit Goes South and LA Builds Commuter Trains
Some stories in the news
Thursday, May 19, 2011
LA Builds Trains
Los Angeles lives in the American imagination as the center of the car culture. But LA is in the process of creating a commuter rail system that will eventually stretch from Whittier to Santa Monica and from Torrance to Pasadena.
The LA Times reports next year the local Metropolitan Transit Authority is expected to have three rail lines under construction. Those include the Crenshaw line, which will hook up the system to LAX.
The key to making it happen was voter approval in 2008 of Measure R, which created a half-cent sales tax for transportation projects. Go to this graphic to see what the system is eventually supposed to look like.
Housing Slump Makes Tax Credit A Loss
The $8,000 federal homebuyer tax credit gave the housing market a boost early last year. It’s a boost that was short lived, as we now know from the decline in housing values and sales we’ve seen this year.
Not only was the tax credit a bad deal for taxpayers, it didn’t seem to work to the advantage of people who used it. A columnist in the Wall Street Journal pointed out that the median price of a U.S. home dropped from $185,000 in March of last year to $170,000 in March of this year.
So while people got $8,000 for buying a house, they lost all that – and then some – due to the decline in the value of their homes. If you think that was just a coincidence, remember that last year’s market increase was directly related to cash incentives to buy. The tax credit expired in April of 2010.
Here’s one argument for leaving the housing market to its own devices. The home tax credit just delayed the market’s search for the bottom.
Consumer Confidence in the Home Market Is Going Down
Consumer confidence makes people go the mall for a shopping spree. It also causes them to buy houses. In April, sales of previously occupied homes dropped .08 percent. That’s a reflection of the tough times people have in getting a mortgage, but also the fact that people aren’t in the mood to buy a house.
A new poll shows us more than half of American don’t expect the housing market to recover until 2014. That may or may not be true, but we know that levels of consumer confidence can be self-fulfilling prophecies.
Convincing a person to buy a house, these days, isn’t like selling snow to Eskimos but the challenge is clear.