By Money Matters Editors
It appears Congress is about set to extend the $8,000 federal income tax credit for first-time home buyers. The credit is set to expire November 30.
Some have argued against an extension, but Money Matters Editors disagree. On the contrary, the credit should be expanded, as well as being extended.
Showing posts with label 000 housing $8. Show all posts
Showing posts with label 000 housing $8. Show all posts
Tuesday, October 20, 2009
Monday, October 5, 2009
Congress should extend the $8,000 tax credit for first-time home buyers through Jan. 1, 2011
By Money Matters Editors
Perhaps it’s time for the U.S. Congress to renew the $8,000 federal income tax credit for first-time home buyers. The credit expires November 30.
And the reasons are obvious enough. First, the current economic consensus projects only tepid U.S. GDP growth of 1.0-1.5 percent in the early stages of the next economic expansion – hardly the stuff of massive job creation outside of the housing sector. In other words, the output gap in the U.S. economy is likely to persist, even as the recovery progresses.
Second, the housing sector, while showing signs of stabilization, still isn’t experiencing enough traffic/demand from potential home buyers. Many prospective home buyers have adopted a ‘wait-and-see’ approach – delaying purchases, hoping for a further decline in prices. Translation: there are a lot of fence-sitters, and the $8,000 credit may be just the incentive needed to nudge these likely-but-waiting home buyers into the market.Further, the extra home buying activity will create some jobs by increasing demand for appliances, furniture, home services, and insurance, as an increase in home buying historically has done.
Perhaps it’s time for the U.S. Congress to renew the $8,000 federal income tax credit for first-time home buyers. The credit expires November 30.
And the reasons are obvious enough. First, the current economic consensus projects only tepid U.S. GDP growth of 1.0-1.5 percent in the early stages of the next economic expansion – hardly the stuff of massive job creation outside of the housing sector. In other words, the output gap in the U.S. economy is likely to persist, even as the recovery progresses.
Second, the housing sector, while showing signs of stabilization, still isn’t experiencing enough traffic/demand from potential home buyers. Many prospective home buyers have adopted a ‘wait-and-see’ approach – delaying purchases, hoping for a further decline in prices. Translation: there are a lot of fence-sitters, and the $8,000 credit may be just the incentive needed to nudge these likely-but-waiting home buyers into the market.Further, the extra home buying activity will create some jobs by increasing demand for appliances, furniture, home services, and insurance, as an increase in home buying historically has done.
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