- Dennis Norman
I think we all know by now how important the home-buyer tax credits have been for our industry, providing the only real increase in home sales that we have seen for some time. Unfortunately, the credits are set to expire November 30th.
Ron Phipps, First Vice President, National Association of REALTORS
Last week Ron Phipps, 2009 first vice-president of the National Association of REALTORS(R), testified before the U.S. Senate committee on banking, housing and urban affairs regarding the “State of the Nation’s Housing Market.”
In his testimony Phipps stated that the latest housing data strongly suggests that the home-buyer tax credit has had its intended impact of significantly stimulating home sales. Phipps point out that ”from about 4.5 million annualized home sales pace in the few months prior to the stimulus, sales have jumped to 5.1 million in recent months. That is a change of 600,000 additional existing home sales. New home sales have risen from mid 300,000 to low 400,000 over the similar period. The rise in sales has been concentrated in the lower-priced homes largely because first-time buyers are looking to stay, rightly, well within their budget.”
Critics of the home-buyer tax credit often refer to the cost of the credit as a reason not to extend the credit. Phipps addressed this saying “at a cost of about $10 billion, should the first-time homebuyer tax credit be extended through the middle of next year, the housing market will likely have recovered nicely with the broader economy on track for a solid robust expansion.” Phipps also points out ”the $10 billion price tag is rather modest compared to the $700 billion in TARP funding and $800 billion of the broader economic stimulus package that was passed early in the year. Moreover, the $10 billion cost is a static measure that does not take into account job creation and increased tax revenue from rising economic activity. Actually, if all of the economic dynamic responses are taken into consideration, the home buyer tax credit can be argued as a net positive revenue generator for the federal government.”
Phipps told the committe that NAR’s research suggests that as many as 350,000 home sales this year can be directly attributed to the availability of the credit and that “without Congressional action now, the market may freeze again – possibly as soon as this month.
I think we have all seen enough “coolness” in the market…I would hate to see the freeze Ron mentions may happen without the credit. We should know soon if Congress is going to pay head to the warning and extend the credit to help the housing market.
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