Is the $3,750 - $7,500 Tax Credit Enough?

The Housing Bill that President Bush approved on July 30, 2008 appears to be a life preserver for many communities. This means tax credits, leading to stable communities, leading to job creation. Here is more information on how the housing bill could be a blessing...

http://realtytimes.com/rtpages/20080731_realestateoutlook.htm

But I'm actually not sure that it will be as large an impact as they suspect.

Here are some of the issues that will continue to impact housing.

1. Increase in fuel costs. This in itself could have several different consequences. Families may want to move closer to their jobs. That would be good for the housing industry. But families that own vehicles that cost a lot to fuel may not have the savings to purchase a new home. They used their savings just to get to work. If these families exchange their 15 miles per gallon vehicle, then they'll also get a new car payment to go with it.

2. Credit scores. Younger adults tend to have more credit cards which could lead to a default if there was a change in income. This lowers your credit score.

3. Job availability. When jobs close down, then families scramble for a job that will feed the family. Often that means that they may need to drive further or pick a job that pays less but is closer to home. These changes may also use up one's savings or affect the ability to save for large purchases.

4. Increase in food costs. I've stopped shopping at Ukrops because it's 20 minutes away, but even at Food Lion, there has been a 10 - 30% increase on food prices. I've notice that many dollar stores have raise their fees from $1.00 to $1.10.

5. Inability to use gifted funds to purchase a new home. See post about down payment assistance.

Obviously there are 2 sides to every story. So back to the positive side, when the economy as a whole is affected one way or another, it appears that the government tries to get involved in another way to aid families. This could mean a tweaking of how credit scores are gathered, more reimbursement checks, and the creation of jobs.

In a "Jenni Perfect World," we would live in one large home with 3 generations of family working and living together. We would all have burn barrels for paper and recycle bins for trash pick up. And we would all have a flourishing organic garden with lots of fruits and veggies. But until HOAs allow us to own a burn barrel and I grow a green thumb, "Jenniland" will remain a dream.

What is your take on the benefits or consequences of the economy on the housing market? I'd love to hear your thoughts!