Calls begin for another home buyer tax credit
As home sales plummet, some folks want the federal home buyer tax credit -- like hope -- to spring eternal.
Florida's governor, who is running for the Senate, told CNN another credit "would help enormously." Another Senate candidate in the hard-hit Sunshine state said he's in favor of a reboot, too. They were reacting to comments on the same CNN show from a federal housing official, who prompted much twittering simply by not declaring, "Read my lips -- no new credits."
After telling CNN that "it's too early to say after one month of numbers whether the tax credit will be revived or not," HUD Secretary Shaun Donovan said: "All I can tell you is that we are watching very carefully. ... We are going to go everywhere we can to make sure this market stabilizes and recovers."
If you're in favor of another credit, don't uncork the champagne yet. Nick Timiraos with The Wall Street Journal sees in Donovan's comments an attempt to sidestep -- "awkwardly" -- a reporter's question about tax-credit revival.
"There’s been a lot of breathless speculation ever since," Timiraos writes.
Economist Thomas Lawler says on the Calculated Risk blog that officials better clarify their position toot-sweet:
If in fact there is “no news here” – and good God I hope administration officials realize that giving potential home buyers the notion that a home buyer tax credit MIGHT be revived will absolutely and unequivocally depress home sales over the next several months – the administration should have Donovan or another HUD spokesperson explicitly state that there is no plan to revive the home buyer tax credit in the foreseeable future – and they should do this SOON!!!!
The idea of the credit was to get buyers off the sidelines and kickstart the housing market. Home sales picked up when Uncle Sam dangled $8,000 to first-timers -- and later to some repeat buyers -- and then took a dive after the tax-credit buffet closed up. (Buyers had to sign a contract by April 30, and most of the deals have closed by now.)
Critics say the incentive encouraged people to buy homes while it was in place rather than later, effectively stealing those sales from the future. Estimated cost to the federal government: more than $25 billion in foregone revenue.
The National Association of Realtors supported the incentive, crediting it (no pun intended) with about 1 million sales. But a spokesman there says it is not calling for a redo. The current slump, he says, really has only one fix.