Last week at the DNC convention and this week at RNC convention the presidents and CEO's of the three major auto companies came begging for a bail out of up to $50 Billion. These CEO's for years have been making millions of dollars in salaries and bonuses. They have signed ridiculous union contracts and have built inferior cars, and now want us to bail them out. I, for one, am not interested in giving them one red cent of our tax dollars!. They are not interested in building better quality cars or having contracts that would make them competitive in the auto industry. Instead they want to whine about Toyota and Honda how they can't compete with them. They say both have a unfair advantage because they build cars in the southern states? Give me a break! If the big 3 wanted to they could move to other states instead of where they build cars now. The CEO's of these companies don't care about their product or employees. They are making their money. The ones who are going to get hurt are the employees and the retirees of these companies. They expect to have jobs for life! But the union is not free of fault here. They are the ones building these cars. The quality is inferior at best compared to Toyota, Honda, Nissan and Hyundai. They fail to realize that the buying public took notice of the quality of their cars.And spent their money elsewhere.Now that the other car companies build cars here in the US and hire Americans the big 3 can no longer use the term 'made in America' and have it mean something. But, the politicians are falling all over these guys. We the tax payers will bail out theses 3 failing companies and they won't change how they do business because they know the fools in Washington will pony up a check. Now what happens when Toyota has trouble and needs money? Don't they employ Americans too? What a web we weave.

Dear Editor of the Wall Street Journal:

I am writing this open letter to Congress in the hope that someone somewhere will take note of the concerns and opinions of a ordinary American citizen.

Members of Congress:

 I am writing you today because as you know the First Time Home Buyer Credit is due to expire soon. A number of congressmen and a few economists and pundits are urging that it not be renewed. I wanted to give you a chance to hear a different side of the story.  I am a Real Estate Investor and an educator, as well as a Licensed Realtor in Georgia.

Critics protest that the program has done nothing to improve home sales. They argue that people would have bought anyway or that the program is just welfare in a new package. This is not the case. I have personally seen that this program has helped quite a few new home buyers realize the American dream.  It has been a particular success in markets that have been devastated by job layoffs and foreclosures.

I live and work in North Port, FL as well as Atlanta, GA. I can tell you in North Port job losses and foreclosures have caused property values to tumble. The community psyche has taken a major hit, with everyone wondering how much further home values can drop. My local REIA group is very cautious about investing in this market. With banks overloaded with foreclosures in this area, the concern is that the market will indeed continue to decline as these new houses become available.

The $ 8,000.00 and $ 6,500.00 home buyer credit has eased some of these fears not only in my markets but around the country. It has also become important to offset costs that might not have been an issue before. One of the issues potential buyers have to deal with, that might not be well known, is that some of the homes that have been through foreclosure have been vandalized and are in poor condition. No bank will finance theses homes and often buyers cannot afford the repairs. But the first time credit to new home buyers has given consumers the confidence in troubled times to invest in a house and has eased some of that burden. And when a home sells, that one sale makes a difference in that local community. The Realtor makes a sale, the Bank doesn’t have to be a property owner, the contractor gets a job doing the repairs and the local government gets to collect property taxes. The community sees the area improving, and that changes attitudes. This is not welfare. I have seen both the GA and FL markets improve and quite a few first time and some second time buyers get new homes. 

Yes, I understand that analysts have said it hasn’t helped the country as a whole and the numbers have changed very little. They are missing the point:  the changes have been local, and in areas that have been devastated it has helped a great deal. So while more can be done to improve home sales, not renewing this credit will slow recovery, and not only of the housing market. If you want to really improve home sales I would suggest the following:

1)    Increase the credit to 10% of the sale and limit it to home prices not to exceed FHA Loan limits. Funds must be credited to the down payment. I know this would be a little tricky because of the buyer’s tax issues. Potential buyers should be able to apply for the funds before they buy and get the credit voucher in advance. It could then be applied towards the down payment at the closing table. A little more work but worth it. This would also encourage banks to release more of the homes they are sitting on because they don’t want to decrease home prices further.

2)    Make the above available to people who own homes now and who would like to sell but are afraid they may lose money on the sale. This also will increase home sales and would increase home prices because of the demand this would cause.

3)    Open the credit to investors with the following limits: They must purchase REO or short-sale properties. Repair costs must be at least 30 % of the home’s value. Purchases would be limited to 20 units per year. No hedge funds, large institutional buyers or bulk buyers. Some people will be concerned with this option, calling it ‘welfare for the rich’. I can assure you that the normal Real-Estate investor is not rich or making Wall Street millions. A large number of them work in a different field and buy a few houses per year, fix them up and rent them out or sell them. Homes that are in markets that have seen major value reductions will now become valuable because investors will become interested in taking a chance. The neighborhoods will improve because vacant homes will be fixed up and will have people living in them again. The local community will get much needed jobs and local government will get the cash it needs to run.

4)    And finally, Banks will need to be required to negotiate home sales in earnest with potential buyers (short sales should not take 6 months or longer).

I understand some of my suggestions will cause the Washington ‘experts’ to scream welfare or some help-the-rich scheme but  I can tell you as long as people feel their community is slowly dying property values will continue to drop, jobs will disappear and this cycle will continue.

People and communities need jobs and a stable housing market, and right now some areas have neither. The First Time Home Buyer Credit has started to improve both and I urge you to continue it and add my suggestions.

Paul J Da Costa

Is a Real Estate investor, licensed Realtor in Georgia, Marketing Consultant and Educator and partner in the REIA Group

.  He lives in North Port, Florida.

www.pauljdacosta.com