Analysts are now predicting that the final price tag for the Home Buyer Tax Credit that started in 2008 under President Bush and extended and broadened under President Obama will cost the taxpayers about $16 Billion. Did it work and was it worth it? Many say yes as the money went directly back to tax payers and any economic stimulus is best used by letting tax payers benefit from it. And it would have and did create additional dollars into the hands of REALTORS, mortgage lenders, title companies, appraisers and other industry participants. The additional demand for homes during this period, it is assumed, helped keep home prices steady, as in San Diego County, or helped keep them from falling faster in other parts of the country. But did it really affect overall volume? This remains to be seen as the year plays out. Did the tax credit bring new buyers into the market or did it merely get people off the fence that would have purchased a home anyway, to buy earlier? We’ll likely need the rest of the year to figure that one out, if it’s possible to ever really know. The fact is that continued value in home prices now and historically low interest rates should keep demand buoyant in the foreseeable future. This Fall could be the real barometer as seasonal volume slows, since the tax credit expired on April 30th, just prior to the traditionally stronger summer volume months. We did see some significant change in volume after the first round of tax credits expired on November 31, 2009. Volume dropped by about 20% over the December through February period from the year earlier period, sparking some comments that this credit simply created more excitement, but not more volume.
Home Buyer Tax Credit – Did It Work?
Advertisement
