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What's the Line on Extending the $8,000 Tax Credit?

The Post's Dina ElBoghdady has this to share from her reporter's notebook.:

Odds are improving that Congress will extend the first-time-home-buyer tax credit beyond the Nov. 30 deadline as it pushes to revive the housing market, said Jaret Seiberg, a policy analyst at Washington Research Group, a unit of Concept Capital. There’s a 60 percent chance that lawmakers will keep the tax credit intact, especially since policymakers from both parties have voiced their support, including Senate Majority Leader Harry M. Reid, who represents foreclosure-plagued Nevada, Seiberg said. But fiscally conservative lawmakers may rally against it in part because it could cost at least $10 billion to extend the tax credit through Sept. 30, 2010, Seiberg said.

Do you think the credit should be extended? Should it be increased -- or broadened to cover all buyers, as real estate and building industry lobbyists propose?

By Elizabeth Razzi  |  September 15, 2009; 6:00 AM ET
Categories:  Buying , Selling , The economy , The market  
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Comments

Broadening it or increasing it would be a huge waste of funds. Most people who are going to buy in 2010 would have bought next year anyway, they don't need a kickback to sweeten the deal. All it accomplishes is potentially re-inflating mini-bubbles in areas that had little or no bubble, and places that have already corrected like PWC.

Extending the current $8k for first timers could be seen as necessary to avoid the gap in demand that would otherwise be apparent as this year's incentive ends. I'd be happier if it had an explicit fade out built in though, like the hybrid credits did.

Posted by: kingstowne_renter | September 15, 2009 9:05 AM | Report abuse

I originally signed my lease on my current rental until March of this coming year. This was before the $8k tax credit was announced. To get out of my lease, I would forfeit two months rent and, most likely, some or all of my deposit. The net difference to buy something by November 30 is approximately $4k. Although this is no small chunk of change, it is not enough to put me in frantic mode to buy something that doesn’t meet my needs just to beat some clock. That being said, for entirely selfish reasons, I would like to have the $8k credit extended as me and my wife originally planned to start looking in the Winter/early Spring. But if the $8k incentive disappears, it is not a deal-breaker either.

Posted by: Rockvegas | September 15, 2009 11:54 AM | Report abuse

I learned today that the original Congressional sponsor of the $8,000 tax credit, as well as the loudest proponent of increasing the credit to $15,000, is a Republican, Sen. Johhny Isakson of Georgia. I guess despite the "anti-big-government" rhetoric, the Republicans are just as prepared as the Democrats to keep feeding the taxpayer-sponsored gravy train.

The most frustrating thing about this, as has been pointed out by many, is that it is free money for people who would make the purchases anyway, as, in most parts of the U.S., the amount of the credit is not enough to justify the underlying economics.

All this does is create an artificial market prop, and spread the cost around to those people who have neither the means nor the inclination to participate. Indeed, I, as someone who does owns neither a house nor a car, am helping others buy both, through this tax credit and the recently-expired Cash-for-Clunkers credit.

I think that the first-time home buyer tax credit should expire ASAP and not be renewed. If it is renewed, at the very least it should be linked to a means test and adjusted for local real estate prices.

Posted by: a_alex_bryant | September 16, 2009 11:06 AM | Report abuse

Btw, Rep. Isacson has a background in the real estate brokerage business. From his official bio: "Johnny began his business career in 1967 when he opened the first Cobb County office of a small, family-owned real estate business, Northside Realty. Johnny later served as president of Northside for 20 years, presiding over the company’s growth into the largest independent residential real estate brokerage company in the Southeast and one of the largest in America."

Posted by: Erazzi | September 16, 2009 12:05 PM | Report abuse

I'm all for extending it, but that doesn't mean it is a good idea.

If someone wants to catch a falling knife an buy real estate now, give them some cash to do it. People forget that housing is not like the stock market-- it takes much longer to recover. If someone gets the tax credit money I would hope they save it for the 6% realtor commisions they will need to pay when the home is being sold. And when you have years and years of no growth (or negative) in housing, you are effectively financing debt.

It amazes me that an $8000 credit on something that is going to lose twice as much in the 1st year of ownership entices people, but what do I know? People flooded the auto dealerships to buy $30,000 cars that will lose half their value in the 1st year, and all we gave them was $4500 (not actual cash either).

It's not the 2001 recession-- there is no 'magical' equity growth of 15-20% anytime soon.

Posted by: rickkinzer | September 16, 2009 4:55 PM | Report abuse

Any money put towards housing is a waste of tax payer funds and not only is it the cause of the current recession and hard-ship, the tax loop holes have been the prime cause of the mess we are in.

As tax payers we're losing billions on bad bets made by gamblers and are picking up the billions from Fannie, Freddie and now the FHA -- how much more would the real-estate industry and home buyers make fellow tax payers bleed ??????

Posted by: free_np | September 16, 2009 8:54 PM | Report abuse

I can't buy by Nov. 30, but hope to buy in the future. The extension will make a big difference on what & when I can buy.

I disagress with the person who said it's a bad deal to buy a house. If I don't buy a house, I will continue to pay rent when I'm retired and I won't have a house to sell when I need to go into a nursing home.

Posted by: abcd51 | September 19, 2009 11:11 AM | Report abuse

I am for extending the credit and opening up to all buyers and here is why. As an employee of the auto industry, we proactively found a job elsewhere requiring relocation. We are selling our home, that we put $480K into, for just under $300K to first time buyers (in their young 20's, no less.) Lucky for them, they can sweep into the area, snatch up a completely renovated house for nothing, suffer no loss on sale of their own and get $8K to boot. We are moving on to an area not nearly as down as this one, struggling to find a house that fits our "new" budget and get no asst. with a similar tax credit.

Posted by: lmm2102 | September 20, 2009 1:28 PM | Report abuse

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