| Stimulating home buyers |
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| Written by Becky | |
| Friday, 30 January 2009 | |
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Right now a new stimulus bill is being put before Congress, having already been passed by the House. A part of this stimulus bill involves a $7,500 tax credit for first time home buyers. This stimulus bill is changing part of a tax credit that had been issued by the Housing Recovery Act through Congress. It was a $7,500 tax credit, that was to be repaid over a period of 15 years. This had little effect on the market and it is hoped that changing this give the market a substantial boost. Mary Trupo, a spokeswoman for the NAR, feels that the bill shows great promise, "Our economists have studied the effect [of the credit] and they say there could be a 10% increase in home sales if it's implemented,...It gives people who are sitting on the fence or who have inadequate funds for closing costs an incentive to act now." According to these numbers, a 10% increase would rake in an extra 500,000 sales for this year. In order to be eligible, buyers cannot have owned homes in the past 3 years and the home to be purchased must be for their primary residence. The credit starts to lessen if the income for single applicants is above $75,000 or above $150,000 for couples and stops at the $95,000 and $170,000 mark. It is also very easy to apply, one just needs to claim it on their tax return. The housing industry has been behind the bill, feeling that getting more first-time homebuyers into the market is the best bet for elevating home sales. It would also allow the sellers of the homes bought, to trade up for bigger or more costly homes. However, some are leery of the bill or at least not as optimistic. A spokesman for the Tax Policy Center, Bob Williams, feels that the bill is flawed as it is available for every new homeowner, such as those who don't necessarily need it to purchase and would have done so without it. Williams also feels that it doesnt address one of the biggest problems affecting the market, fear. Williams elaborated on this saying, "As long as people are uncertain about what markets are going to do, this won't help much,...It's not enough to change that." May also feel that in order to truly increase its effectiveness, the tax credit would have to be available to all home buyers. |
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