The first-time buyer tax credit and you
The $8,000 tax credit for first-time buyers (or more precisely, people who haven't owned a home in three years and meet the income limitations -- try saying THAT five times fast) is due to expire the end of next month. I'm curious how many of you are doing some serious house-hunting to try to beat the deadline, and how many of you have been affected one way or another by the credit so far.
The numbers suggest an impact. Buyers in the Baltimore metro area signed 19 percent fewer contracts in February than a year earlier. The drop in March -- the first full month after the program was altered so the money doesn't have to be paid back -- was a much more modest 4 percent. Signed contracts began rising in April.
In August, the most recent numbers from Metropolitan Regional Information Systems, the number of new contracts was up 25 percent from a year earlier.
So it certainly looks like there's buying going on that wouldn't have happened this year if not for the thought of $8,000 in the bank. But who knows -- it could be a huge coincidence. Help sort it out by noting how (if at all) the credit has affected you:
But wait -- there's more!
Sun columnist Jay Hancock has already weighed in. Let the credit expire, he says. A number of folks (including some Wonk regulars -- hi guys!) commented on his blog post, some passionately for extension and some very much against.
Here's part of what Jelena had to say:
I think it's not going to be pleasant either way. End the credit and most likely the prices will dip more. Don't end the credit and our national debt will grow even further.
IMHO there are much more efficient and easier ways to help first time home buyers instead of just giving away money.
1) Any credits should be given to TRUE first-time buyers, not some people who haven't owned a home in a couple of years.
2) Instead of a give-away, provide a loan to help with the closing costs. Or, better yet, states and institutions should lower the fees associated with the home sale. Doesn't everyone find them outrageous? "Title examination fee"?
3) Do away with PMI, "front foot assessment" and other rip-offs.