Please, keep those tax credits rolling
That, not surprisingly, is what the battered real estate industry is arguing as it lobbies for an extension of the $8,000 first-time homebuyer tax credit.
So how important is the extension for the future of the real estate market as we know it?
According to a new Zillow.com survey, the extension could make a small but crucial difference, though not without a big cost to taxpayer.
With the tax credit now set to sunset in November, home sales, after months of steady increases, could fall back into flat or negative territory, the new report finds.
To back up its claim, Zillow.com is rolling out a new survey of homebuyers that finds that extending the tax credit would bring an additional 334,000 buyers into the market over the next year starting in December
Overall, that estimate is based on a nationwide survey of prospective homebuyers in which 18 percent cited an extension of $8,000 tax credit as the “primary’’ influence on whether to jump into the market.
While not a huge amount overall, it is the margin between a market in which sales are climbing and a stagnant or even declining market, contends Zillow chief economist Stan Humphries.
“There’s little doubt that the tax credit will boost demand at the margin, and that fact will make it easier to work down our current high inventory levels of existing homes on the market,’’ Humphries states.
Still, extending the tax credit could prove costly to the rest of us who have either already bought homes are renting now.
Zillow.com estimates that extending the tax credit for a year could cost the federal government an additional $14.86 billion.
Obviously, at some point the market will have to stand or fall on its own without Uncle Sam’s help.
But is it time to go cold turkey now?
That makes me, for one, a bit nervous.
What about you?
