Sacramento Real Estate Views

First Time Home Buyer Tax Credit

Will Congress Extend The $8K Tax Credit?

As many of you know, the $8000, first time home buyer tax credit expires on November 30th.  There has been rumors that Congress will extend it now that the housing statistics nationwide are beginning to improve and a bottom appears to be in sight. (“appears” being the operative word!)

An article in the Wall Street Journal this week cited about the best evidence that I’ve heard making a case for the extension of the tax credit.

Beyond the fact that our country in deeply in debt and can probably ill afford additional losses in tax revenue, housing is believed to be at or near the bottom as indicated by the nationwide increase in sales. (click here for the MSNBC article)

Additionally, there are many economic factors that indicate that the end of the recession is nearing and sustainable growth could be just around the corner.

Does Congress want to stifle the little growth that housing has showed this year?

Probably not when there are votes on the line…sorry folks, that’s just how it works.

The Argument

There are those in Congress as well as real estate lobbyists that believe the tax credit should not only be extended but increased from $8000 to $15000 and available to all buyers, not just first time home buyers.

As a real estate professional who works with a good majority of investor clients, this would be an incredible turn of events.

That said, the possibility of a non owner occupied buyer getting the tax credit is a bit far fetched.  Where our market is hurting right now is in the move up buyer.

An increase in the amount of the tax credit AND including all owner occupied buyers would certainly provide a boost to home sales especially in the higher end areas of Placer County.

Some feel Congress will not want to risk stopping what little recovery has occurred thus far.  Others believe that there are more important issues at hand, such as the current health care debate, that could also add to the current historic deficit, that an extension might be fiscally irresponsible.

When the last tax credit was implemented in 2008, $7500 repaid over 15 years, housing was in a different place, there wasn’t a recovery in sight or indications that there would be a recovery anytime soon.  That’s different now as we’re beginning to see increases in sales, not only locally but nationwide in both existing home and new home sales.

I, personally and for selfish reasons, would love to see an extension of the current $8000 tax credit and the inclusion of all buyers.  Increasing it to $15,000, while it would help my business, may not be fiscally healthy for the overall economy.  Call me a conservatively selfish!

What’s your opinion? How can we balance a housing recovery without damaging our long term future any further?  Going for short term gains is how we got into this mess in the first place.

Related posts:

1. New California Tax Credit Bill Signed

Tags: first time home buyer tax credit

This entry was posted on Friday, August 28th, 2009 at 9:33 am and is filed under Market Commentary. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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