Expand the homebuyer tax credit
Letter to the EditorBy Inman News, Friday, August 21, 2009.
Re: 'First-time-buyer tax credit is "unfair" ' (Aug. 18)
I completely disagree with Marcie Geffner's conclusions about the First-Time Homebuyer Tax Credit -- all except the last one.
Unlike so many aspects of the American Reinvestment and Recovery Act signed into law last February, the First-Time Home Buyer Tax Credit is actually working as intended -- as a true economic stimulus. Your math stops short of the real point -- that the broader economic impact of home sales goes far beyond the real estate industry.
National Association of Realtors economists have calculated that each existing-home sale at the median price contributes $63,101 into the local economy. So if you multiply the 1.3 million taxpayers who were estimated to claim this credit for the 2008 tax year by the NAR economic impact figure, you will see that those sales to first-time buyers in 2008-09 were responsible for an $82 billion economic impact.
That's real money that flowed into the economy and was spent in home improvement stores and on service providers ranging from plumbers to painters, locksmiths to lawn maintenance, and electricians to carpenters, just to name a few likely sources.
I have yet to see any data or anecdotal evidence that this tax credit is artificially inflating home values. It's not a handout or a hidden gift -- it's a highly visible incentive designed to spur housing demand, boost sales, increase consumer spending and create a multiplier effect on the economy that will create new jobs and ultimately help lead the U.S. out of a recession.
All that said, I will wholeheartedly agree with you that the existing First-Time Home Buyer Tax Credit hasn't done enough. This has nothing to do with fairness, and everything to do with what is best for the U.S. economy. First-time homebuyers are indeed a narrow niche, and it's the move-up homebuyer market that needs to be addressed in order to accelerate a general economic recovery.
Realogy and its leadership have been at the forefront of the charge (in calling for an expansion to) the existing homebuyer tax credit -- from $8,000 to $15,000, open to all homebuyers and without any income limitations -- and its leadership team has been highly vocal in delivering this message to our elected officials and key policymakers in Washington, D.C. Legislation for an expanded tax credit is in a Senate committee and there are several versions of companion bills in the House as well.
I'll leave you with some insight from one of the nation's leading economists. Mark Zandi of Moody's Economy.com published research earlier this summer that showed the potential impact of such an expanded homebuyer tax credit would be an additional 600,000 home sales and $33 billion in real gross domestic product growth in 2010.
In dollars and sense, that's the business case for an expanded homebuyer tax credit.
Senior vice president, corporate communications
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