The tax credit for new home buyers, begun last year and extended through April 30, represents a waste of taxpayer money, a variety of experts say.
Michael Widner, an analyst for Stifel Nicolaus, estimates that the credit costs the government as much as $80,000 for every additional home sold as a result of the credit.
He estimated in a report cited by Bloomberg that the program cost $17 billion through November.
“(That’s) an exceptionally inefficient use of tax dollars,” Widner wrote.
Of the 1.83 million homes sold to first-time buyers in the first 11 months of 2009, only 303,000 sales were inspired by the tax credit, he says.
Widner doubts the program’s extension will boost home sales much this year.
“People who were going to be lured in had a good nine months to make their decisions before the last-minute extension and acted before it,” he wrote.
Others agree with Widner.
Douglas Rice and Robert Greenstein, of the Center on Budget and Policy Priorities, wrote on the think tank’s Web site, “The vast majority of tax-credit benefits have gone to families that would have purchased a home anyway, even without the credit.”
Steven Pearlstein, a business columnist at The Washington Post, offers an even harsher assessment.
“This $10 billion boondoggle is nothing more than a giveaway to the real estate industrial complex and people who could afford to buy a new home anyway,” he wrote.
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