Should the first time home buyers credit be extended or are there other options? The time available to use the $8000 first time buyer home credit is almost gone. There’s little time left to buy a home and close on it by November 30th to be eligible for the credit.
Should the tax credit be extended? Some lawmakers, the building association, and the real estate industry believes it should.
Republican Senator Johnny Isakson of Georgia said:
This economy that we’re in went into the tank because of residential housing, and it will only really come out of the tank with residential housing.
The stimulus that Congress passed was $787 billion. The total cost of this, if you extend it for a year, not half a year, and if raised to 10,000, would be about $28 billion. That’s less than four percent of the stimulus – yeah, we already have proof of how many home sales it will generate, how many jobs it will produce. So by any measure, it is a small down payment on a great repayment that we’ll get in our economy and it’s not throwing dollars away.
The first time home buyer tax incentive had a positive effect on real estate sales, obviously, as we’ve seen higher sales since last year at this time. but has it also had a positive effect on the economy?
Every 1,000 home sales generate $112.4 million of economic activity with $71.9 million of it directly from home-sale preparation and the actual real-estate transaction. In addition, more than 700 new jobs are created.
Buying a home requires building inspectors, lenders, escrow people, and movers to complete the process. Home buyers buy curtains, appliances, beds, couches, TV’s and other hard goods. Buying a home employs shop keepers, store personnel, and the factory workers who make the goods needed to furnish a home. Home owners employ plumbers, electricians, landscapers, and other contractors. Home sales to first time home buyers has allowed other home owners to buy and make a move up, helping to increase overall home sales.
Home buying has provided one of the few boosts to the national economy this past year. Money must come back into the economy in order to breathe life into it.
Just this morning, I heard on NPR about a housing program for first time buyers that is coming back into play, The Housing Finance Agency. This agency has been unable to fund loans for first time buyers since the credit freeze. The Obama administration is looking into opening credit by issuing tax exempt bonds to raise the money to lend to first time home buyers.
Treasury’s plan is for the federal government to buy the bonds from HFAs, who will in turn have the money to lend to first-time home buyers…
Should we extend the $8000 first time home buyers credit? Or should we look to new/old programs, such as the HFA? What do you think?
Eastside Real Estate Buzz
