Should Congress Renew Homebuyer Tax Credit?

Currently, Congress is discussing the renewal of the First Time Homebuyers Tax Credt, which offers first time homebuyers $8,000 cash for purchasing a home. Currently the credit is set to expire on November 30th, 2009. Renewal options include a simple 1 year extension and/or expanding the credit to include all home buyers (not just first time buyers).

Proponents of the extension point to its effectiveness in aiding the troubled housing market:

Home resales rose in September to the highest level in more than two years, beating expectations, as buyers scrambled to complete their purchases before a tax credit for first-time owners expires.

“There’s a mini-boom going on in the housing market,” said Thomas Popik, who conducts a monthly survey of real estate agents for Campbell Communications, a research firm.

The inventory of unsold homes on the market fell about 7 percent to 3.63 million. That’s a 7.8 month supply at the current sales pace, and the lowest level since March 2007.

Estimates show that 1.8 million homes were purchased using the credit with roughly 20% of those purchases coming as a direct result of the tax credit.

Mark Zandi, chief economist for MoodysEconomy.com, is among those in favor of extending the credit. Zandi would also make it available to all homebuyers. “The most fundamental argument for the credit is that nothing works in the economy if housing is falling,” Zandi said. “[The credit] is a good insurance policy. It’s vital to stem the housing price declines.”

But not everyone supports the credit extension:

Opponents argue that the tax credit is too expensive and doesn’t help enough people. Extending the credit through the end of 2010 and making it available to single filers earning up to $150,000 and joint filers earning up to $300,000 would cost an estimated $16.7 million.

I personally support the credit. Of the $3,000,000,000,000.00 our country has already spent on stimulating the economy, no effort has been as effective as this program. I might argue that no other effort has been effective period. Comparatively speaking $16.7 million is pocket change. It is certainly more beneficial to our economy than the temporary employment caused by road construction or another $600 dollar check in the mail.

via Home Sales Rise as Buyers Exploit Tax Break – NYTimes.com.

via REALTOR® Magazine-Daily News-Congress Debating the Tax Credit.