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Contrary to popular belief, money does not grow on trees. Likewise, the billions of dollars being fire-hosed from Washington into the housing industry don’t just run off the printing press for free. Tax credits for first time buyers some mean more taxes from others. The most likely amongst the others? Current homeowners, of course.

Are REALTORS concerned? Hard to tell. Of course, they’re in a pickle: The supposed “voice” of real estate can’t decide if it is on the side of home owners (their future seller clients) or home buyers (their current clients). Plus REALTORS are direct beneficiaries of the housing tax credit. Nevermind, because the real blame for sluggish sales goes to appraisers, inspectors and mean bankers, right? They’re the ones screwing up deals and withholding credit. Agents are just caught in the middle….

Still, it’s high time that the real estate industry stop playing both sides of the aisle and decide whether it works for Washington or . Of course, anything to boost sales today, even if it means prolonging the housing recovery in the future! Trouble is, some home owners have long memories. They may feel like they already paid their “commission” in taxes, the next time they go to list their home with a broker.

Like all intervention, the current tax credit isn’t really helping real estate brokers who are looking to make a career out of real estate. Like the temporary Cash for Clunkers auto credit – the tax credit is distorting the real estate marketplace. It is causing false expectations on the part of consumers, by altering pricing and purchase decisions: Distorted sellers will defray lowering their homes by $8,000 to recovery-market levels, believing (not incorrectly) that buyers have extra money to spend from Uncle Sam. Buyers will put off making decisions and sensible offers (and risk paying higher mortgage interest rates) believing that Congress will extend the program or enact some other such “housing preferential treatment” in the future. Caught in the middle, REALTORS will hedge their bets, yet damage their credibility and reputation as being the “knowledgeable and experienced professionals” who are supposed to help consumers sort everything out.

And a hidden consequence of the tax credit is that it will actually slow the market further – because the money has to come from somewhere. That “somewhere” may be hard to pinpoint, but broadly it comes from everywhere else the money could have been used to jump start the economy. Especially by those who will be paying the taxes, such as small businesses started in the home-offices of everyday homeowners. Most new jobs are created by small businesses. And most small businesses are started at home. Ironic, don’t you think?

The biggest unintended consequence of the housing credit just might be rising unemployment. People without jobs don’t buy homes.  Some even lose them.

There is an old story economists like to tell (some prefer to forget): A thug throws a brick through a baker’s window. The bad news is that the baker has a broken window. The good news is that the glass maker down the street has a new window to make. The “unintended” consequence, however, is that the tailor across the way has lost a sale – because the baker has to take his money to the glass maker instead of buying the new suit he had been saving for. Without the extra sale, the tailor closes his shop. And so the broken window, once thought to have increased the local economy by stimulating the glass maker, has actually caused the unintended loss of a job somewhere else. Not to mention, the baker has to wear worn out clothes for yet another year.

It’s important to remember that this is a fully refundable tax credit. This means that tax filers see a refund of the full $8,000 even if their total tax bill – the amount of withholding they paid during the year was less than that amount. In other words, buyers who qualify (mostly because they bought a home for the first time) will get $8,000 knocked off their taxes, and in most cases receive “refunds” of money they never paid. So that means it’s money taken from someone else in the economy. (See to be clear.)

A lesson, then, for anyone who thinks that nobody gets hurt when you’re giving other people’s money away.