Expand the homebuyer tax credit
Letter to the Editor
By Inman News, Friday, August 21, 2009.Re: 'First-time-buyer tax credit is "unfair" ' (Aug. 18)
Dear Editor:
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.
Mark Panus
Senior vice president, corporate communications
Realogy
Parsippany, N.J.
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Submitted by Linda Hutchinson on August 21, 2009 - 10:21am.
Bravo!
Linda Hutchinson, REALTOR
Coldwell Banker Residential Real Estate
Orlando, FL 32801
407-898-9090 Direct
www.OrlandoNest.com
Submitted by Bruce Hahn on August 21, 2009 - 12:28pm.
American Homeowners Grassroots Alliance
We completely agree.
Bruce Hahn
American Homeowners Grassroots Alliance
Submitted by Benjamin Dona on August 21, 2009 - 1:22pm.
I couldn't agree more Mark.
The only concern I have is will the current administration do the so called right thing. Considering they are going to pump $4.25 billion of the economic stimulus money into creating tens of thousands of federally subsidized rental units, I'm not sure they have a real the desire to extend the tax credit.
Guess we'll just have to wait and see.
Florida Real Estate | Southwest Florida Blog
Submitted by Marcie Geffner on August 21, 2009 - 4:37pm.
The first-time home buyer tax credit clearly benefits real estate brokers and agents, so it's no surprise that they want to expand it.
But it's a dud for homeowners, who could just as easily spend the money (and support the economy) themselves, rather than have their tax dollars given to their neighbors just because they bought a home.
And as for the "economic impact figure" and "multiplier effect," well, that's just creative economics.
Marcie Geffner
www.marciegeffner.blogspot.com
Submitted by Jon Astaris on August 23, 2009 - 4:33pm.
Referring to the tax incentive for first time buyers, Mr P**** says inter alia: "It's not a handout or a hidden gift".
No it isn't a hidden gift. It's an out-in-the-open gift. It's tax money that THE REST of us have to make up, and it ain't a hand out because it's not given voluntarily, it is first STOLEN from the rest of us and THEN given away.
That some real estate people agree with this form thievery surprises no one. They profit from it handsomely themselves. Ms Geffner is right.
Submitted by Yvonne Thomas-Brooks on August 24, 2009 - 6:51am.
Thank you Mr. Mark P****!
Excellent!
Yvonne Thomas-Brooks
Director of Corporate Training
Metro Brokers GMAC Real Estate
Submitted by Utah Realtor on August 24, 2009 - 9:14am.
Granted, most of the first time home buyers would have purchased with or without the $8,000 tax credit, it still has made a huge impact.
Now if there was some incentive for real estate investors who wanted to purchase rental properties....
Alan Barker
Cornerstone Real Estate Professionals
http://www.utahcornerstone.com
http://www.ogdenutahhomes.com
Submitted by David Curry on August 30, 2009 - 6:55am.
I'm a bit torn on the subject, as this $8000 tax credit is indeed a handout, and arguing that it isn't is nonsensical.The first time home buyer credit ignores the larger portion of the market, perhaps all in the idea of "fairness". Senator Johnny Isakson has a $15k tax credit for all buyers on the table now, so we'll see if that works. I've written on this before, but as long as we're going straight up socialist, we might as well send the stimulus to the proper target. The problem is REO property, and in order to engage the real estate investor to buy these properties, he's the demographic that needs the stimulus. Read about it here - http://www.genevalakefrontrealty.com/blog/index.php?itemid=308
David Curry
Geneva Lakefront Realty
49 West Geneva Street
Williams Bay, WI 53191
262-245-9000
www.genevalakefrontrealty.com/blog
Submitted by Vince Ciroli on August 31, 2009 - 7:18am.
With 2010 being a mid term election year and real estate being a major contributor to the overall economy we can expect some type of "help". As we have just witnessed politicans take trillions of dollars out of the productive economy and spend it on pet projects. We have been asking China to finance these pet projects and new entitlement programs and when they stopped buying our treasury bonds, the government "loaned" money to the banks and they in-turn buy the bonds.
What we have witnessed over the past 10 months is the migration of both power and money from the financial community to the political community. Now to remain in power they must pull out all the stops...even as voters now understanding that we can't borrow our way out of this mess...just like we can't use credit cards to solve our personal credit issues.
KICKING THE CAN DOWN THE ROAD:
The $7,500 "loan program" was the first "can" kicked down the road by the political community to make the "voters" happy...the program was not big enough nor attractive enough; a bigger "can" was needed. Thus we have the current $8,000 "can". Some what more attractive, especially to both first time homebuyers and realtors. But this "can" is only working for those select few first time home buyers and for lower end inventory. To get the housing market really back on track a much bigger "can" is needed...maybe more than $8,000...maybe the $15,000 discussed.
While I personally don't believe in these "bailouts"; this type of tax credit proposal has some merit, especially for first time buyers. With first time buyer, the $8,000 will more than likely be spent and spent quickly on such things as appliances, carpeting, furniture, paint and many other things that are produced here in the USA as mentioned above. Given a multplier effect we can expect about a 7X or a $56,000 impact into the economy for each $8,000 given to a home buyer.
(For those that don't believe in the mulitplier, just wait until your friendly elected official introduces you to the Value Added Tax (VAT)...you will understand the mulitplier effect in reverse.)
So when I look at this type of program (pure tax credit), relative to other programs (cash for clunkers), it has more positive economic impact than many of the other alternative that politicans will deploy to keep themselves in "Power".
You know your elected official is going to spend your money to stay in power...so where would you like him or her to spend it...not spending it is not an option.
Enjoy it will you can!!
Vince Ciroli
EXIT One Realty
Columbus, Ohio
http://www.EXIT1Team.com
614-212-7729