As home sales falter and mortgage rates tick higher, some lawmakers are calling for the current $8,000 tax break for first-time buyers to be increased and expanded to any buyer.
The credit in place now, part of the stimulus bill from earlier 2008, expires in the fall. Under a new proposal being talked about in Congress, the limit would increase to $15,000 and be offered to anyone who buys a home.
That’s exactly the bill first introduced by Sen. Johnny Isakson (R-Ga.) earlier this year. It died in committee, but the new version, resubmitted by Isakson, is co-sponsored by Senate Banking Committee Chairman Chris Dodd (D-Conn.).
"It would go a long way toward inducing trade-up buyers into the market," Lawrence Yun, chief economist at the National Association of Realtors, told USA Today.
A competing House bill would extend the $8,000 credit to June 2010 and expand it to all home buyers, and offer $3,000 to people who refinance. Another version simply extends the current break to all buyers through 2010.
In addition, some lawmakers want income caps — currently $95,000 for singles and $170,000 for couples — removed.
What’s less clear, of course, is how to pay for the tax break, since its passage would reduce government income as the country goes deeper into already huge deficits and faces a coming tsunami of rising entitlements costs due to Medicare and Social Security.
Meanwhile, a Harvard University housing expert says he expects “echo boomers,” the children of the baby boomers now ages 25 to 44 and many of whom rent, will eventually rescue housing.
As a group, there are five million more of them at peak house-buying age now than even in their parents’ record-setting boom, says Nicolas Retsinas, director of Harvard's Joint Center for Housing Studies.
“Echo boomers are larger than the baby boomer population. Couple that with immigration and you have the seeds, the possibility of a housing recovery," Retsinas told Reuters in an interview.
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