Could we possibly see the return of the Home Buyer Tax Credit?
The National Mortgage Complaint Center, a consumer advocacy group, is asking Congress to introduce legislation to restore the federal tax credit for home buyers in order to “rescue the U.S. residential real estate markets” and prevent home prices from dropping any further.
They are asking the tax credit be increased to $15,000 and be available to every qualified home buyer, including first-time buyers, repeat buyers and investors.
The National Mortgage Complaint Center said in a statement, “With the enormous devaluations we have seen in most U.S. residential markets, we need to stop the hemorrhaging, and do something meaningful to stabilize one of the most vital aspects to the U.S. economy — our residential real estate markets.”
Last Years Tax Credit
Last year, Congress offered a home buyer tax credit for first-time and repeat buyers to help spike home buying. The maximum allowable credit for first-time buyers was $8,000 and $6,500 for repeat buyers. The last version of the tax credit expired on April 30, 2010. After that the demand for housing completely collapsed (despite record low mortgage rates).
Currently there is a huge surplus of homes on the market. The excess supply and lack of demand are causing house values to drop. Predictions are pessimistic with declines of 5-20 percent expected over the next year or two.
Nothing’s Been Ruled Out
Apparently, the Obama Administration has not ruled out bringing back the tax credits even though Congress is not currently considering any new legislation to expand it.
Reported in the New York Times, HUD Secretary Shaun Donovan said that though it is not known whether the tax credit will be revived, the administration would “do everything we can to stabilize the shaky U.S. housing market.”
As I see it, if the first tax credit only spurred sales while it existed, and was then taken away, another credit (exclusive of other market conditions such as employment) would have to be long-term to have any real lasting affect on the market.
Time will tell so stay tuned!