Should The Tax Credit Be Extended?

Here comes that push to get lawmakers to extend that $8000 first time home buyer tax credit or maybe available to all home buyers with increased return of $15,000.

The housing tax credit has seemed to work, but what many can only view as helping the low end of the market buyers.

So I get this email from ‘the NAR’, yes that some association that claims every day it’s a good time to buy a home. They have a pre-written letter/email for me to send of to my local congressmen only to probably get some heartless letter back. ;-)

Here it is in all it’s glory:

Subject: Homebuyer Tax Credit: Extend and Expand

Dear [decision maker name automatically inserted here],

As a Realtor and a constituent, I can assure you that the $8,000 first-time homebuyer tax credit has definitely been a success.  Homebuyer interest and housing sales increased almost as soon as the ink was dry on the tax credit legislation.  Today’s lower prices and interest rates appeal to consumers, but it’s been the tax credit that has attracted people to open houses and to homeownership.

That progress could grind to a halt sooner than you think.  Congress must act NOW to extend the credit through 2010.  Otherwise, uncertainty will return and the market might again be frozen — possibly as soon as October.

A homebuyer is eligible for the tax credit only if the home is “purchased” before December 1, 2009.  That means that buyers have to find a house, complete a contract, satisfy any contingencies, secure financing and go to closing by November 30.  Accomplishing those tasks by November 30 will become more difficult with every passing day.  In today’s market, it generally takes between 45 and 60 days to go from contract to closing.

The market has improved, but it has not yet fully corrected itself.  The credit needs to be extended for an additional period of time and expanded in order to build upon the progress that’s been made. Uncertainty about the future of the credit will dampen consumer demand.  The best way to assure continued housing activity is to extend and expand the credit and to do that NOW.

We can’t wait until late in the year to see what happens.  Consumers will drop out soon if they can’t predict what’s in their future.  Please act NOW to extend and expand the credit through 2010.

Sincerely,

Jason Sandquist

So what do you think, should it be extended or let it expire?

Update 9/16/2009: I found this that came across the associated press earlier today about the White House thinking about extending the housing tax credit.

About Jason Sandquist

Jason Sandquist is the Founder and CEO of Loop Commercial Advisors, LLC. A boutique commercial real estate firm serving Minneapolis & St. Paul commercial real estate market, as well as surrounding areas . You can also read Inside the Property Lines, a weblog delivering creative thoughts. He works with landlords and owners with leasing assignments and disposition of properties, as well as start-ups and businesses helping them find space and create strategic real estate decisions. He also helps investors with disposition and acquisition of commercial investment properties.

You can follow Jason on Twitter, Facebook and LinkedIn, as well as Google+

Comments

  1. I think we should let the tax credit expire and see how the market reacts during the six months following the tax credit deadline. If we extend it buyers may wait longer to purchase a home.

  2. The economy really needs to correct itself without government interference.

  3. here is a excellent link today from calculated risk with excerpts on what to do with the tax credit.

    interesting numbers and very costly!

  4. Jason:

    I’ve worked all my life, paid my bills, mortgage, etc. I think now the
    tax credit should be increased, however, to all homebuyers. That is fair~!
    Don’t you think? When will we know?
    Rusty

  5. @Rusty

    I feel ya on the hard work/pay all bills aspect. I was just chatting with the my financial planner the other day and he had mentioned that SSI will run out by 2031 and start having more go out than come in within the next few years. Scary stuff. More worried about the government spending and where the money will come from.

    No doubt the tax credit has worked, but only the lower end of the market. Buyers are buying but the only thing that is being bought are the bank owned homes. Nobody to move up, the chain is broken. Once the tax credit ends, which will be Dec 1st, home sales are horrible from Dec through Feb… We will no a lot by then.

    Will keep my eye on the extension if it happens, no clear-cut information yet… you will probably see a post when it does.

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