A solid case for extending the credit, but with a troubling twist
Marc Zandi, chief economist of MoodysEconomy.com, is the latest to push for an extension of the $8,000 tax credit.
At the least, I found his reasoning – and his proposal – a cut above the typical, panic button, extend-or-the-market-will-die approach.
Zandi wants to see the credit extended to next June to all buyers except the very wealthy.
Zandi’s concerned that rising unemployment and foreclosures still represent major drags on the market. Extending the credit could help take the edge off both trends, while by next summer there’s a chance the job market will have stabilized.
His arguments, as well as those against extension, are laid out nicely in this CNNMoney article.
Still, Zandi’s proposal also includes an interesting – and potentially controversial - twist.
Congress should set aside a specific amount of money for the tax credit, and then tell home buyers to literally come and get it on a “first-come, first-serve basis.’’
Certainly a creative idea, but this part of Zandi’s proposal is worrisome.
While that may be needed in some markets that are just flat on their backs, I wonder what kind of impact that would have in traditionally high-priced areas like Boston.
The selection of middle market, starter homes has never been great around here. Anyone who has tried looking for a home in the Boston area in the $300,000 range and below in the past eight or nine years will tell you that. And there are already signs that the prospect the tax credit will expire this fall is stirring up bidding wars for lower priced properties.
That said, Zandi does a better job than most of arguing how an extension could bridge the gap until the economy starts to kick into higher gear.
