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A Stimulus That Works for Homeowners

Dennis Byrne 28 January 2009 No Comment

What’s needed is getting prospective buyers back into the market. A direct subsidy could do that. Those who remember the seemingly forgotten Housing and Economic Recovery Act of 2008 might be saying, “We tried that and it didn’t work.” The act did sound good–it provided a First-time Homebuyer Tax Credit of up to $7,500. But, according to surveys conducted by NAR, the credit isn’t working as well as hoped because homebuyers have to pay the tax credit back within 15 years. When first-time homebuyers hear about the repayment requirement, they lose interest, and don’t buy.

Now, instead, the association and others are advocating a “non-refundable” credit, as contained in Senate Bill 253, recently introduced by Senator Johnny Isakson (R-Georgia). It would expand the tax credit to all homebuyers and the credit would not have to be repaid unless the home is resold in three years. Yes, it would be somewhat more expensive than the current credit, but its backers say the program would pay for itself in terms of a rekindled housing market, higher gross national product and increased government revenues.

It certainly would be a lot cheaper than blindly scattering $850 billion or more across the country without any clear purpose.

Read More at Real Clear Politics

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