Nearly one in five prospective first-time homebuyers say an extension of the tax credit for first-time homebuyers would be the biggest factor in deciding whether to buy a home by the end of 2010, according to a survey by real estate listings and valuation site Zillow.com.
Asked if an extension of the tax credit would influence their plans, 18 percent called the credit the "primary influence" in their decision, 25 percent said it would be a "significant influence," and 27 percent said the credit would have "some" influence on any homebuying decision. Only 31 percent said it would have no influence on their decision.
Zillow said the survey’s results imply that an extension of the tax credit through Nov. 30, 2010, could generate 334,000 additional home sales.
An estimated 1.4 million homebuyers have claimed the existing tax credit, and the National Association of Realtors claims 350,000 would not have purchased a home otherwise.
Extending the credit is controversial, because of the cost to taxpayers. Congress allocated $13.6 billion for the current tax credit, expecting 2 million buyers would claim it before it expires Nov. 30. …CONTINUED
Zillow estimates that if the current credit of up to $8,000 were extended by one year, a total 1.86 million first-time homebuyers might claim it between Dec. 1, 2009, and Nov. 30, 2010, at a cost of up to $14.86 billion.
Earlier this year, Sen. Johnny Isakson, R-Ga., introduced S 1230, a bill that would nearly double the tax credit’s ceiling to $15,000 and expand the pool of those eligible to claim it by lifting first-time homebuyer and income restrictions. The Congressional Budget Office estimated the cost of a similar bill introduced by Isakson last year at $34.2 billion.
In the name of compromise, Isakson — a former real estate broker and industry advocate — has since gotten behind a more modest bill, S 1678, that would simply extend the existing tax credit to June 1, 2010.
In a statement, Zillow Chief Economist Stan Humphries said that if extending the tax credit by one year generates 334,000 home sales, four out of five homebuyers who claim it "would have bought their home even without the credit."
While 334,000 sales may seem like a small number, it "could make the difference between a robust annual increase in home sales next year and a flat or negative change in home sales relative to this year," Humphries said.
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