“A billion here, a billion there, sooner or later it adds up to real money.” That famous quote, attributed to the late Senator Everett Dirksen, (R, Illinois), might well apply today to the dollars currently being expended on the very popular $8,000 home buyer tax credit.
David Crowe, Chief Economist of the National Association of Home Builders, evidently agrees with that assessment. He says the credit, if extended, will help to increase the purchase of homes by more than 380,000 units and will add close to 350,000 jobs to the economy during the coming year.
Those jobs will generate more than $15 billion in wages, and, in some good news for our governmental coffers, more than $11 billion in tax revenues. Crowe is far from alone in his support for extension of the tax credit. He is also supported by the National Association of Realtors, and Mortgage Banker’s Association.
While it is always typical for interested trade groups to lobby for bills that extend their self interest, it is somewhat unusual to have so many politicians from both sides of the aisle joining together to push for an economic stimulus.
However, that is just what is happening. Today at a meeting of the Senate Banking Committee, Chairman Chris Dodd (D-CT) and Senator Johnny Isakson (R-GA) stood together to call for an extension of the $8,000 homebuyer tax credit.
They also urge that the income limit for homebuyers be raised to $150,000 for single individuals and $300,000 for married couples, In addition, they feel the tax credit should be applicable to all home buyers, not just first time home buyers. They see the tax credit as a necessity for continuing economic recovery
Critics make a case that continuation of the credit is not worthwhile. They state, and even industry groups that favor the tax credit are willing to concede this point, that many people who claimed the credit would have bought homes even without it.
Nonetheless, while over 1.4 million people have so far put in a claim for the tax credit, the National Association of Realtors proudly points to statistics indicating that at least 350,000 sales would not have occurred without the stimulus of the $8,000 tax credit.
Whatever its future fate, the $8,000 home buyer tax credit has created a momentum that was badly needed in a formerly slumping housing market. Home inventory figures have dropped from a high of 4.1 million units in November of 2008 down to 3.6 million units today.
That means the 11 month glut of homes that threatened to forestall any chance of recovery last year has moved down to an 8.5 month inventory today. While housing is not out of the proverbial woods yet, it should be noted that a 6-7 month supply of housing inventory is considered a stable market. Continuation of the $8,000 tax credit could go a long way toward moving the nation toward that kind of housing market condition.
Written by Marc Jablon, Realty Associates
marcjablon@yahoo.com / 561 / 213 – 6139
www.marcjablonhomes.com/
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