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BETWEEN A ROCK AND A HARD PLACE

By
Real Estate Agent with COLDWELL BANKER RESIDENTIAL BROKERAGE

Information provided by RisMedia:

Zillow analysis of current market trends shows that, if the credit were extended, a total of 1.86 million first-time home buyers would purchase homes between Dec. 1, 2009 and Nov. 30, 2010. If all could take advantage of the full $8,000 tax credit, this could mean up to $14.86 billion in tax credits. "Although nearly two million first-time home buyers may receive the tax credit if it is extended for another year, the incremental impact of the credit is far smaller," said Zillow Chief Economist Stan Humphries. "These numbers suggest that extending the credit might bring an additional 334,000 homebuyers who would not otherwise purchase a home into the market. While 334,000 may seem like a small number relative to the total number of home buyers who would claim the credit, their addition to the market next year could make the difference between a robust annual increase in home sales next year and a flat or negative change in home sales relative to this year. 

"There's little doubt that the tax credit will boost demand at the margin, and that fact will make it easier to work down our current high inventory levels of existing homes on the market. That said, the cost of bringing these additional home buyers into the market is substantial. Assuming 1.86 million first-time buyers take advantage of the full credit once extended, this translates into an additional $14.86 billion in government spending. For every five home buyers who receive the credit, four would have bought their home even without the credit." 

Jeremy Williams
Red Hawk Coaching - Kingwood, TX
Business Coach, Husband, Father, and Dog Wrangler

Gloria,

I agree with the last point in your post that the buyers taking advantage of the credit would have bought a home even if the credit was not in place.  All the credit has done is get the 1 out of 5 off the fence and making a decision.  I think a year of promoting this credit to the buyers, utillizing taxpayer dollars, is long enough.  Great post and topic for conversation.

Jeremy Williams
Keller Williams Realty NE
Kingwood, TX
www.williams4yourhome.com

 

Sep 26, 2009 07:16 AM