Foreclosed House Inventories Need Tax Credit Extension
The expected growth in Foreclosed House inventories is a valid argument for the extension of the first time home buyer tax credit, according to a report released by Washington, D.C.-based Campbell Surveys and analysis by several economists.
The report showed that the federal $8,000 first time home buyer tax credit has prompted 357,000 first time home buyers to make their home purchases within the period February 17 to September 15.
Campbell Surveys analysts said they examined real estate transactions before and after the enactment of the American Recovery and Reinvestment Act, which included the federal tax credit incentive program.
They said that before the February 17 enactment, home purchases made by first time home buyers comprised 32 percent of all home sales. After the enactment, home sales made to first time homebuyers sharply increased, accounting for 42 to 43 percent of total home sales.
Robert Dietz, economist of the National Association of Home Builders, said the association is pushing for another year of extension, until November 30, 2010, and the inclusion of all buyers of primary homes.
Legislation to extend the credit is pending in the U.S. House and Senate. Supporters of the tax credit extension, such as IHS Global Insight economist Patrick Newport, argued that the extension would contain foreclosed house inventories arising from the continued rise in unemployment and the resetting of ARMs.
According to the Internal Revenue Service, 1.4 million Americans have already claimed the home buyer tax credit incentive.
Thomas Popik, research director at Campbell Surveys, said that his team’s 357,000 estimate for March through September is nearly equal to the estimates made by the National Association of Realtors and Moody’s Economy.com.
Mark Zandi, chief economist of Moody’s, said that 175,000 homes were sold to first time home buyers through July and he expected 400,000 more home sales to be completed for the same group of buyers. He reiterated that the sales would have not occurred if the first time home buyer tax credit was not offered.
Similarly, Walt Molony of NAR, said that his group estimated an additional 350,000 sales of previously-owned homes this year and that sales will drop by 6 percent if the tax credit is not extended.
Molony explained that a bigger foreclosed house inventory is expected over the coming year and that the tax credit incentive is needed to absorb the inventory and stabilize house prices.
Related Posts:
- Foreclosure Property Auctions Face Challenges in Texas
- Buyers Survey Florida Foreclosure Property Listings
- Increased Sales of Foreclosure Properties in February
- Buying Foreclosure Homes for Sale in the West
- Both Foreclosure House Rate and FHA Loan Rate Increased
