Support for Extending the Home Buyer Tax Credit is Rapidly Growing

By
Real Estate Agent with The Buyers' Counsel

House on moneyIn something I see as an expanding snowball effect, the sentiment for extending the Home Buyer Tax Credit is growing daily.  It is beginning to feel more like fear now that if this snowball is allowed to melt, home sales will fall into a black hole.  

The IRS recently reported that over 1.4 million Americans have claimed the $8,000 first-time home buyer credit to date.  And, it is widely asserted that this program has had a huge hand in helping to stabilize the housing market this year.   

The current credit of $8,000 for first time home buyers has been in effect for sales as of January 2009 and is currently scheduled to end on November 30 of this year.  

So far, it has been available only to those who have not owned homes for three consecutive years prior to purchase.  The home must be a primary residence and income restrictions apply.  Couples can not earn more than $150,000 and individuals qualify if they earn less than $75,000. 

As the clock winds down on this popular incentive, housing industry advocates are worried about the consequences of its expiration - mainly that the headway which has been made could come crashing down and that the market will take a serious downturn when it ends. 

"Just like the Cash-for-Clunkers program, there could be a hangover effect," said Mike Larson, a real estate analyst for Weiss Research.  

Of course, NAR is aggressively pushing Congress to extend the credit until at least the end of next year.  They are also asking for it to become available to all buyers, not just first-timers.  

There have been numerous blog posts and articles dedicated to the pros and cons of the extension and both sides have valid points.  One is that this a huge amount of government spending will eventually catch up with us and we will have to pay dearly in the end.    

The other side is the mounting fear about what will happen when giveaway is over. 

NAHB president, Jerry Howard has said, "If we don't extend and expand the program, the seeds of growth planted could die." 

Senator Johnny Isakson, a former real estate broker, has revisited a bill that he tried to push through last spring to extend the tax credit, making it available to all buyers and to increase the amount to $15,000. 

Others in Congress, Howard Coble of North Carolina and Dan Burton of Indiana (both Republicans, by the way) are also pushing for an extension to the end of 2010 and to open it up to all home buyers. 

There may be two problems that could stand in the way of the extension right now: 

  • The White House is not supporting it.  They are not standing in the way but are not pledging to do any work to make it happen, also
  • Finding the additional money is going to be tough.  $14 billion has already been allocated to it and this will cost billions more. 

I see this issue as being driven by anxiety on both sides and will be curious to see who will win out and the ensuing effect it will have on the housing market.  

Has the current tax credit program had an impact on you?  Do you have a fear about it coming to an end?

Related Posts:

Extending the $8,000 tax credit

Using the Tax Credit as a Down Payment on a Home

Taking Advantage of the $8000 First-time Home Buyer Tax Credit

Update - the $15,000 Home Buyer Tax Credit Cut from the Stimulus Bill

 

Do you have questions about buying a home in the Metrowest area?  I would love to talk with you. Please feel free to call me at 508-881-6230 - any time or E-mail me. 

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Copyright 2009 - Claudette Millette, President, TheBuyersCounsel

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Rainer
10,479
Angela Zuyus
Keller Williams Realty-Abilene - Abilene, TX

WOW! Great statistics. I think that one year is not nearly long enough for the tax credit to restabilize the economy. The problem with the housing market didn't happen over night and a short term solution is not suitable for the long term problem. I believe that it should be extended for at least 6 more months or as long as possible so that any first time homebuyers that did not get to take advantage of the credit because of financing issues that could soon be resolved could actually get to use it!

Sep 18, 2009 07:01 AM #1
Rainmaker
403,509
Claudette Millette
The Buyers' Counsel - Ashland, MA
Buyer, Broker - Metrowest Mass

Angela:

I think that many people would agree with you and I think it has done a lot of good this year.  I would like to see the program be redone to include all home buyers - not just first - timers.

 

Sep 18, 2009 07:08 AM #2
Ambassador
1,366,564
Loreena and Michael Yeo
3:16 team REALTY ~ Locally-owned Prosper TX Real Estate Co. - Prosper, TX
Real Estate Agents

Claudette - I'm support of this extension for my buyers and my personal selfish reasons (easier sales for me). But at the same time, the other side of the argument is that it will cost our future generation a lifetime of paying back. It is difficult for me to know exactly the impact but I do know that other businesses are directly impacted because of it.

Sep 18, 2009 08:53 AM #3
Rainmaker
403,509
Claudette Millette
The Buyers' Counsel - Ashland, MA
Buyer, Broker - Metrowest Mass

Loreena:

It is a bit of a tough call, actually. It's good for the housing market right now but I do fear some of the ramifications.  Like, where is all of the money coming from?  Someone above my pay grade needs to figure this one out.  I just hope they do it responsibly. 

 

 

 

Sep 18, 2009 10:35 AM #4
Rainmaker
484,352
Trey Thurmond
BCR Realtors - College Station, TX
College Station , Texas Homes

Claudette

I too have mixed emotions on the credit. Some analysts say the actual effective cost to the government is 40K! That is a lot of dollars when you figure the number of folks who obtained the credit already.

Sep 18, 2009 02:34 PM #5
Rainmaker
403,509
Claudette Millette
The Buyers' Counsel - Ashland, MA
Buyer, Broker - Metrowest Mass

Trey:

I had not heard or read that number.  There is definitely some serious money being spent on this program. 

 

Sep 18, 2009 02:44 PM #6
Rainer
42,917
Brian Griffis
Realty Choice - Springfield, MO

Only a few billion here and there, who is counting.  If we are going to give a credit, why not just give a credit to everyone in the country like they have done in other countries instead of discriminating against those who aren't first time home buyers, don't want to buy etc.?  Shouldn't everyone be able to participate in the economic recovery?  If the government has to prop up prices, doesn't that mean that prices are too high?  Why not let the market do what it is supposed to do and set a clearing price so that we know what houses are really worth.

Sep 21, 2009 08:30 AM #7
Rainmaker
403,509
Claudette Millette
The Buyers' Counsel - Ashland, MA
Buyer, Broker - Metrowest Mass

Brian:

There are definitely a lot of emotions on both sides of this issue.  If they decide to keep the tax credit, I certainly hope they make it include all buyers, not just first-timers.  However, I would also like to know where and how the money is going to come from and whether or not it is fiscally responsible to keep it up.

 

Sep 21, 2009 09:59 AM #8
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Claudette Millette

Buyer, Broker - Metrowest Mass
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