I said a while back ago that I didn’t necessarily think the tax credit was a good idea, especially at the beginning of the time window. At first it is abstract idea to get a tax reduction that you didn’t feel until the next year, later it becomes real. Also if you were already buying, you just found free money for doing something you already planned to do.
We will see the final results but so far the bump is only about 7% of existing homes sold because of the tax credit, though I don’t know how they figure this out since there is no form and they didn’t ask me about my clients motivation. (They don’t say how it impacts the 500,000 new home sales.)
Calculated Risk Blog works out the numbers and impact of the tax credit,
The National Association of Realtors estimates the tax credit resulted in 350,000 additional purchases. So divide $15.2 billion by 350 thousand = $43,000 per additional home. And the numbers will get worse if the program is extended.
I wrote recently about the effect on the economy when a house sells. According to the National Association of Realtors, on average, each house causes adds an additional $63,000 into the economy. I don’t know if this will offset the $43,000 per first time buyer who was buying anyway but that may easily play into legislator’s decision this fall when they reconvene.
In light of this should they continue the tax credit or let it expire?
###
I found Calculated Risk’s blog posting via http://deansellsaz.com/2009/09/02/top-5-real-estate-posts-of-the-day-for-922009/ on twitter at http://twitter.com/DeanOuellette
