Lawrence Yun, the National Association of Realtors’ (NAR) chief economist, is pushing hard for a tax credit for homebuyers. In a recent NAR press release he said, “Monetary stimulus is plentiful – what is needed more at this point is a home buyer tax credit to get buyers off the sidelines and prevent the market from overshooting on the downside.”
Is more buying stimulation what is really needed for the long term health of our economy? It would certainly provide a nice benefit for the dwindling number of Realtors helping pay Yun’s salary. Yet it would add one more artificial stimulus that will cost taxpayers money, specifically the people who can’t afford to move because of negative equity.
A bill was proposed in the House of Representatives April 2 that would make just such a tax credit available, but only for a short period of time. The bill provided for termination of the up to $10,000 tax credit after one year and would have restricted the credit to owner occupants for one time only.
The Senate approved its own bailout plan with a tax credit provision April 23. This version provides up to $7,000 in tax credits, but only to owner occupants purchasing foreclosed homes.
The House of Representatives is working on an answer to the Senate’s plan which would provide a 10% tax credit up to $7,500 for first time homebuyers and renters.
Is it just me, or does a rebate check for purchasing a home sound an awful lot like equity skimming legitimized by the government?