New tax credit stokes housing hopes, fears
Current government incentive expires at end of November
BY RICHARD MIZE
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Published: November 6, 2009
The U.S. House on Thursday joined the Senate in lengthening and beefing up the tax credit put in place last February as part of the $787 billion economic stimulus. President Barack Obama is expected to sign the legislation.
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Increasing sales
"I believe that when people are offered incentives like this, they will go ahead and purchase now rather than waiting. We certainly saw that with the $8,000 first-time homebuyer tax credit,” said Lisa Yates, CEO of the Oklahoma Association of Realtors. "By including current homeowners in the incentives, it should increase sales at all price levels across the Oklahoma housing market.
"This is a wonderful thing for consumers, Realtors and the Oklahoma economy. When someone buys or sells a home, they also boost the economy through purchases in home improvement, landscaping and furnishings.”
The credit is available for the purchase of principal homes costing $800,000 or less, making vacation homes ineligible. The credit would be phased out for individuals with annual incomes above $125,000 and for joint filers with incomes above $225,000.
The credit would be extended an additional year, until June 30, 2011, for members of the military serving outside the United States for at least 90 days.
Many Oklahoma builders recognize that extending and expanding the tax credit will fuel housing sales until next summer, said Mike Means, executive vice president of the Oklahoma State Home Builders Association. But, he said, they’re worried about federal spending and the longer-term effect on housing.
"Are we just postponing the problems” he said some people wonder, "or repeating the problems” that caused housing to tank nationally in the first place? Anything that gets people into houses they couldn’t afford otherwise, whether the "liar’s loans” that many lenders banked on during the boom or a government subsidy now, can cause problems eventually, he said.
Plus, homeowners already under contract to buy a new house wonder if they are eligible for the $6,500 credit, said Linda Finch, a Realtor with Paradigm Advantage Real Estate in Oklahoma City. That confusion raises the question of whether the new credit could scuttle some deals now in progress.
In the meantime, this week’s legislation can’t hurt, said Scott Senner, a mortgage consultant with First Commercial Bank in Edmond.
"First-time buyers have definitely seen the light over the past month and I have been extremely busy with loans that needed to close by Nov. 30,” he said.
And real estate agents are ready to stay busy, said Judy Lindsay, president of the Oklahoma City Metro Association of Realtors and a managing broker at Paradigm AdvantEdge Real Estate.
"We saw the effects of the first-time homebuyer tax credit on our market this year. The ripple effect on our entire economy is tremendous,” she said.
"This will create new jobs and protect existing jobs and that’s what makes our economic merry-go-round keep going. We couldn’t be happier.”
Related Topics:
Public Finance, Domestic Policy, Political Policy, Politics, Business, Taxes, Economic Policy, Real Estate, Real Estate Sales, Economic Stimulus
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