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Expanding the federal Homebuyer Tax Credit is not a good idea

Congress is currently considering whether or not to extend, and even expand, the Homebuyer Tax Credit. The current credit which gives up to $8,000 to new homebuyers (singles earning up to $75K and couples earning up to $150K) will expire on December 1st. Leading the fight to have the credit extended and expanded is (big suprise) the National Association of Realtors. They are proposing that the credit be increased to $15,000 and be available to all homebuyers, not just first-timers. This is an expensive proposition that will do very little to encourage home buying that wouldn’t have occurred otherwise. What it will do is cost $75,000 for each home purchase that it actually incents, temporarily inflate home values to the good of the sellers and not the buyers, and cost the federal treasury $15 billion that it does not have.

For a great analysis of the proposal including a full explanation of why it should not be considered by Congress check out this new report from the Center on Budget and Policy Priorites.

12 Comments

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  2. me

    October 31, 2009 at 12:00 pm

    I don’t believe anyone can say our Government doesn’t have $15 Billion for helping people that need helping. By what I see the Government always finds a way to make more $ then they give back and that is why Obama can spend so much of it on things that have nothing to do with making the people of America happy. Not doing the job he said he would by telling everyone what they wanted to hear. He works for us, not us for him. When is the Government going to start asking us what we want instead of telling us what they are going to do?

  3. steve

    October 31, 2009 at 12:35 pm

    What a bunch of bunk this article is. The NAR was negotiating to get a $15000 credit for all home buyers, but the current plan that is supported in the Senate has the FULL SUPPORT of the NAR. The current proposal is up to 8K for first time homebuyers, and up to $6500 for buyers who have lived in their homes for at least five years. This DOES NOT help investors or spec builders.

    All this nonsense about the tax credit artificially inflating home values is bogus balony. Home sellers are marking their homes down as much as possible, and the ones I know aren’t about to raise the asking price of their home because of this credit. That line of thinking is being promoted by investors who want to talk the market down even further.

    The fact is that a healthy housing market is good for everyone. The sooner home owners regain some value in their homes, the faster their personal balance sheets improve and the economy begins to improve.

    This is just another article by a Republican investor who wants the economy to fail some more so they can get some more great real estate deals. You aren’t fooling anybody!

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  5. uberVU - social comments

    October 31, 2009 at 2:31 pm

    Social comments and analytics for this post…

    This post was mentioned on Twitter by creditfix09: Expanding the federal Homebuyer Tax Credit is not a good idea: Congress is currently considering whether or not.. http://bit.ly/39KYmu

  6. Elaine Mejia

    October 31, 2009 at 6:06 pm

    Steve, you are way off on this one. To read yet nother nonpartisan research organization’s analysis about the homebuyer tax credit check out this report from the respected Brookings Tax Policy Center:
    http://www.brookings.edu/opinions/2009/0924_tax_credit_gayer.aspx

  7. jt

    October 31, 2009 at 8:22 pm

    this is the only thing that has helped the economy. I am a relater in Florida and it has helped a lot. anyones that argues that it doesn’t work is ignorant

  8. Martha Cruz

    November 1, 2009 at 9:50 am

    I just signed a contract yesterday and I strongly agree that the Tax credit plays a big roll on giving people the incentive to purchase, especially the way the economy is right now. Some of these homes are missing appliances or need repairs that otherwise would have to come out of pocket from the buyer.

  9. Alex

    November 1, 2009 at 12:40 pm

    I wish we could get a tax credit for something . When we bought our house 11 years ago we planned and bought the house we could afford not necessarily the house we wanted. It is a fifty year old ranch which needed work. We do a little at a time on it. We bought all used appliances. At the time the bank would have loaned us more but we bought on the low end of our loan. We still made payments on time for two years when my husband was laid off with no severance from Nortel and opening a gym at 5AM. We went with out a lot including health insurance.

    We have energy efficient cars so cash for clunkers did not apply. Besides we are not having another car payment until our house is paid for in 12 years.

    I closed my Bank of America account after they got bailed out and are still paying there Executives high salaries.

    I have Multiple Sclerosis but do not qualify for any government help.

    Even with lay offs and illness we have a perfect credit rating. We struggle pay check to pay check. What kinda help do we get?

  10. wendy

    November 1, 2009 at 8:58 pm

    excuse me who the hell are you to make that judgement it will help stimulate the economy, if you hadn’t noticed is not diong good, so whats your problem

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  12. sandiegocarinsurance

    June 11, 2010 at 4:00 pm