MoCoRealEstate

$8,000 1st Time Homebuyer Credit Expires Soon – Is This a Bad Thing?

September 29th, 2009 Categories: In General

To take advantage of this federal tax credit, a first-time home buyer must close on their home purchase by the end of November.   This means that a buyer needs to ratify a contract by the end of October.  Should buyers be hitting the pavement to take advantage of this great deal?  I don’t think so.

I have not been a fan of this federal tax credit for several reasons:

1. A home purchase is a big-time commitment.  Even looking at 5 years of ownership, $8,000 is a drop in the bucket.  I don’t believe a buyer should let the prospect of getting this credit deter them from finding the right house that they can comfortably afford.
2. If you “need” the credit to afford a home, then you are not in a position to buy. Don’t do it.
3. Today’s insanely low interest rates really do make homes affordable.  No other incentive is needed.
4. If the overall goal is to pump money into the economy, then haven’t we already done that (government stimulus, cash for clunkers, GM, Chrysler, etc)?  Enough already.

I could list more reasons.  I guess that my fundamental problem is that, like a lot of Americans, I don’t support borrowing money to give one-time tax breaks to help prop-up home prices.  Don’t get me wrong – I love a tax break as much as the next guy.  But I don’t like borrowing money to do it.

The National Association of Realtors (NAR), home builders and others are pushing hard to extend the credit.  Some would like to see it increased to $15,000 for all buyers.  I contacted Ben Cardin and Barbara Mikulski and gave them my thoughts.  You should do the same.

Posted by Bruce Lemieux

This entry was posted on Tuesday, September 29th, 2009 at 2:11 pm and is filed under In General. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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