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!!

When it's time to buy or sell real estate in Greenville, SC you need to work with a realtor who is honest, trustworthy, and knows the market. The Dave Edwards Global Team makes a strong effort to keep up with Greenville, SC market trends by analyzing market information on a daily basis. Who do you know that needs to sell? Contact us today at 864.275.7250.

 

3 Comments on $8,000 Tax Credit Is A Failure

SEP
28
2009
3 Featured Posts

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.
8:22am • #1
216,371 Points

Thank you for your comments! Good point about buying sooner.
8:35am • #2
NOV
03
2009

I think the tax credit has been a huge success, especially if one considers the long-term implications of home ownership. I know several people who also took advantage of the federal $1,500 home improvement tax credit for fixing up their home once they bought it. I hope it gets extended, which it looks like it will.
7:43pm • #3


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