Unless you have been living under a rock, you may have heard that the First Time Home Buyer’s Tax Credit is due to expire at the end of November and along with that, the incentive for new buyers to enter the real estate market. There are some that say this is simply a boondoggle for buyers who would have bought anyway without the monetary bonus. I beg to differ… in my opinion as a “boots on the ground” Realtor working with first time home buyers who were happy renters and only decided to purchase a home with the help and benefit of this incentive… hey, $ 8500 goes a long way toward helping with the down payment, new furnishings or paying the mover.
There are several versions of this bill before our legislators at the moment seeking an extension … which is supported by the National Association of Realtors. I know what you are thinking and yes, that does sounds a bit self-serving for Realtors to support a bill that will help sell real estate. Very much like if GM or Chrysler lent its support for the extension of the infamous Cash for Clunkers program. But it goes a bit deeper than simply trying to protect real estate transactions. Another version not only seeks an extension but also broadens the coverage to any buyer – which would be a boon to the move-up segment of our society but may prove too costly to pass. Personally, I would love this version to pass but at a minimum, the first time home buyer is the consumer who will benefit the most from an extension of the existing plan.
According to the NY Times Online in a recent article released on September 15th,
“Mark Zandi, chief economist of Moody’s Economy.com, favors expanding the credit to all home buyers, even investors, into next summer. “The risks of not doing something like this are too great,” he said. “I don’t think the coast is clear.” James Glassman of JPMorgan Chase echoed those views but said he favored continuing to restrict the credit to first-time buyers.
On the other side of the issue is the Tax Policy Center, a joint venture of the Brookings Institution and the Urban Institute. It labeled the original credit as one of the worst provisions of the stimulus package, on the grounds that the money is a bonus for people who would buy a house anyway. The center has an even dimmer view of extending the credit to all buyers. “Is this the best way to spend money we don’t have?” asked senior fellow Roberton Williams.
Dean Baker of the Center for Economic and Policy Research called the credit “a questionable redistributive policy” from renters to home buyers, but said that he used it himself when he bought a house.”
Our nation’s economic health has been and will always be driven in part by our housing market. I agree with Mr. Zandi that while the costs for the credit is high, the cost of doing nothing is so much higher. We are sitting on the edge of recovery and this extension will help push us further toward the brighter future that exists around the corner. Be sure and drop an email or note to your legislator to let them know how important this issue is to your nation’s recovery.
If you would like more information about who qualifies for the current program, click here to visit my previous post “Understanding the First Time Home Buyer’s Tax Credit Before it is Too Late!”