This week, I introduced stand-alone legislation to boost housing demand and to restore the economy by expanding the first-time homebuyer tax credit passed by Congress earlier this year.
The legislation would increase the maximum amount of the credit from $8,000 to $15,000 and expand the current tax credit so that it applies to any buyer of any home, not just first-time buyers. The legislation also would eliminate the income caps of $75,000 for an individual and $150,000 for a couple under the current tax credit. Finally, the legislation would extend the tax credit for one year from date of enactment and would allow homebuyers to claim the credit on their 2009 tax return for purchases made in 2010.
The legislation has already been endorsed by the National Association of Realtors and the Housing Working Group of Business Roundtable. In addition, it has gained bipartisan support in the Senate from Senators Lamar Alexander, R-Tenn., Jim Bunning, R-Ky., Saxby Chambliss, R-Ga., Chris Dodd, D-Conn., John Ensign, R-Nev., Joe Lieberman, ID-Conn., Lisa Murkowski, R-Alaska, James Risch, R-Idaho, and David Vitter, R-La.
After spending more than three decades in the real estate business, I understand the housing market and its critical role in our overall economy. In the mid-1970's when America faced a similar housing crisis following a period of easy credit and loose underwriting that flooded the market with new construction and a three-year supply of vacant homes, Congress responded by passing a $2,000 tax credit for anyone purchasing a new home for their principal residence. The results from that tax credit were clear and swift as home values stabilized, housing inventory dropped and the market recovered.
The first-time homebuyer tax credit has made a difference. First-time home buyers have used it and the market has stabilized slightly. However, the real housing recession is not with first-time home buyers - we have a recession in the move-up market. Americans are still facing an illiquid housing market, a decline in their equity, a decline in their net worth and a depression in the housing market that we are obligated to correct if we possibly can.
Today, in the United States, one in two sales made every day is a short sale or a foreclosure. That is an unhealthy market, and it is continuing to precipitate a downward spiral in values, loss of equity by the American people and a protracted, difficult economic time for our country. This legislation will swiftly help our economy get back on track.
From Honorable Johnny Isakson, US Senate, Georgia