One thing is clear about the $8,000 first-time home buyers tax credit enacted by Congress last winter. It sparked home purchases.
Less clear is whether the credit should continue. It expires Nov. 30.
Legislation under consideration would not only extend it but dramatically alter the terms. The credit would almost double to $15,000 and be available to anyone buying a home, not just first-time buyers. Also, income restrictions would end. A bill with these terms nearly passed the Senate in June.
Many real estate professionals and economists maintain that’s all for the good.
They say the legislation is doing exactly what it was supposed to: spur a home-buying recovery, in turn supporting the economy through a rough recession. The credit has facilitated several hundred thousand home sales, analysts tell The Times.
But opponents, including housing expert Robert Shiller, counter that the assistance is going to people who would have bought homes anyway.
And, they say, unless the credit is allowed to expire on schedule, it will likely become a huge new drain on government finances.
Up to 40 percent of all home buyers this year will qualify for the existing, restricted credit, The New York Times reports.
At the present home buying pace, the government will be on the hook for a tune of $15 billion in the program, more than double what the government forecast when Congress passed the stimulus bill in February.
Expanding the credit could cost $50 billion to $100 billion more, experts warn.
National Association of Home Builders Chief Economist David Crowe told Reuters that the hurdles facing the housing market “include the impending expiration of the $8,000 tax credit.”
There is no free lunch, as usual.
“Even if it’s extremely popular, it’s going to have to be matched up with something unpopular” such as a tax increase on other Americans, to pass, Mark Weinberger, an Ernst & Young LLP vice chairman who negotiated President George W. Bush’s tax cuts, told Bloomberg.
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