Increase The First-Time Home Buyer Tax Credit and Extend it to Everyone
categories: First time home buyers, Local Market Conditions, Stuff I like to talk about
I know, the title of this post sounds completely self-serving. You’re saying “Of course a Realtor wants the tax credit extended, oh, and even increased in size”. Here me out though.
Like it or not, both administrations passed stimulus bills to the combined tune of about 1 trillion dollars. There is no shortage of opinions on whether or not the bills were good ideas. My argument is if we are going to do something (and I think we should) then where should that money be spent. So far, according to ProPublica, a site that tracts stimulus spending, the government has spent about 19% of the most recent $792 billion dollar bill.
Economic Dollars Spent as of This Week:
- $111 billion spent
- $146 billion in process
- $324 billion left to spend
- $63 billion in tax cuts issued
- $150 billion in tax cuts remaining
Now, I’m not saying that because it’s there we should spend it all but I agree with many who are of the opinion that what has been spent so far isn’t delivering the intended effect. I think the question we should be asking is “what is the best use of those stimulus dollars?”
First, I believe that reducing home inventories will help the housing market recover which is right up there with job creation in helping the economy recover. Secondly, I don’t believe in letting the markets do their thing, on their own, with the idea that how it all falls out will be better. That line of thinking is right up there with the people who don’t believe they should vaccinate their kids. If you’re sick, you go to the doctor. If you have the flu, take an antibiotic. We wouldn’t be good stewards of our economy if we didn’t try to lessen the impact or speed the recovery of the economic crisis.
Why do I think an expanded home buyer tax credit will have a more profound impact?
Let’s start with the current first time home buyer tax credit that is set to expire on December 1st. It’s had a firm impact and has worked in spurring home purchases, in the lower price ranges mostly. These buyers did not just suddenly become capable of purchasing a home. But why haven’t they taken advantage of deals that have been available over the past 12 months? There are many buyers in a position to buy but are concerned about where their market is heading. Or they have perceptions that they’re going to get an already aggressively priced foreclosure for another 50% off - they get mired in searching for an unrealistic “deal”. The tax credit incented them to move forward now.
Buyers in other price ranges will respond to that same incentive that first-time home buyers did. They’ll want to take advantage of a tax credit opportunity while it’s there. Those home purchases will allow sellers to move and buy. It will spur purchases of durable goods like refrigerators, washers, TV’s etc. The National Association of Home Builders estimates that extending the program would create more than 347,000 jobs, generate over $16 billion in wages and over $12 billion in business income.
It’s a topic that can initiate a lot of arguments but I’m curious to hear what you think.
The first time home buyers credit its a great thing for our countries real estate market. We need a spark as a real estate market and this has helped alittle. I am glad they extended it.