It has been estimated that 1.4 million buyers have taken advantage of the current $8,000 tax credit being offered to first time buyers and those who have not owned a home in 3 years. Assuming that each buyer has received the full amount then $11.2 billion dollars has been paid (1,400,000 x $8,000 = $11,200,000).
Now let's assume that each of these buyers only received $4,000 instead of the $8,000. This would mean that $5.6 billion has been paid out ($4,000 x 1,400,000 = $5,600,000).
This past week in Realtor Magazine it was estimated that only 357,000 buyers were motivated by the tax credit to go out and purchase a home. If the full tax credit was taken by each buyer then $2.8 billion was paid to these buyers. It's even lower if you assume they only received $4,000.
Potentially $8.4 billion has been paid to those who were not motivated by the tax credit. They would have bought a home this summer even if there was no tax credit. Do we really call this success? Should we even be trying to extend this tax credit? My verdict is in: This tax credit needs to stop now!!
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Dave I tend to agree with you. I was speaking with others in my office last week that the $8000 tax credit has not added NEW business to my sales, but has replaced business. I feel most of these buyers would have bought anyway and most likely would have bought SOONER than they did had they not been waiting around to see if the credit may be extended or even increased to the rumored $15K that some are wanting to see happen.