The State of Maryland is offering mortgage incentives for folks whose jobs are relocating to Maryland due to the Base Realignment and Closures (BRAC). The theory is to get people who might rent or commute from Northern Virginia to buy in Maryland. Like most government programs, it sounds good in theory, but it makes no sense in reality.
Just like the $8,000 home tax credit offered by the federal government recently, there is no proof that this program isn’t a handout to folks who were going to buy anyway. The vast majority of the federal programs incentive went to people who were planning to buy anyway. The incentive may have pulled demand forward, but it did not create any demand.
The government has no means to determine if this is just an extra tax break for someone with a job. If they worked like a business, they might do some real data analysis. They could wait until the BRAC employee has either started renting or remained in an outside region to Maryland such as Delaware or Northern Virginia. Then they could target these folks with direct mail to entice a home purchase. This way the credit would be used as it is suppose to be, not as wasted money for someone who was planning to buy anyway.
Second, Maryland has a $10 Billion shortfall. Why would they give money away for a program that has no clear parameters if it is successful? Sure, they want the transfer taxes, which are hefty in the state, but the state needs to be cutting unnecessary expenses.
Third, the program hurts non-BRAC potential buyers. Lower rates may spur some demand, which could increase home prices (in theory). This hurts non-BRAC folks buying at higher mortgage rates, which could prevent them from buying. So for every BRAC purchase, a normal purchase could fall through.
It just amazes me how these idiots with no business experience come up with hairbrain ideas and then pat themselves on the back. In the business world, these jacknuts would get fired for wasting money.