Is the housing tax credit encouraging more to buy?
When the Obama administration included an $8,000 tax credit for first-time home buyers in this year’s big federal stimulus bill, housing industry analysts wondered whether it would be enough to encourage more people to begin buying homes in greater numbers.
That’s what everyone wants to see, after all. The more people who buy houses, the sooner the housing industry’s slump ends and the sooner the national economy begins to recover.
It’s probably far too early to tell what impact the tax credit has had. Certainly, home sales have remained mostly stagnant. There was an uptick in February home sales, but that was probably a seasonal increase — one that happens every year — more than anything.
But one Congressman says he’s already seen a positive impact from the credit.
In a recent story by the Associated Press, Ed Perlmutter, a Democrat from Colorado, says that he has been getting several calls from homebuilders who are hoping that Congress extends the first-time buyers tax credit past its intended expiration date of Dec. 1.
That increase in home sales in February officially came in at 5.1 percent. That’s the largest month-to-month increase in about six years, according to the Associated Press story. Sales of new homes also rose in February, jumping 4.7 percent from January. Of course, January of this year featured a record low in the number of new-home sales, so that 4.7 percent increase isn’t quite as impressive as it first seems.
Personally, I hope Congress does extend the first-time buyers credit. Anything that encourages people to buy, and makes it easier for them to afford that first home, is a positive. We don’t want to artificially create new home buyers, of course — and we certainly don’t want to use tax incentives to goad people who are perfectly happy renting into taking out mortgage loans — but it never hurts to help those people who want to purchase their first home.
