Housing industry welcomes tax credit for homebuyers
Staff and wire report
Feb 6, 2009 at 12:00 AM
NE Tenn. Association of Realtors President Carla Dunn - like other Realtors - is closely watching the housing provisions that have been added to the Senate version of the economic stimulus bill.The item that has housing market watchers' attention this week is a $15,000 tax credit intended to turn around the battered housing market. Consumers would be allowed to spread out the credit over two years, making it possible for those who pay less than $15,000 in taxes to benefit. Anyone who buys a home within a year of the bill’s signature would qualify. To deter speculators, buyers must occupy the house as their main residence for at least two years.The tax incentive is likely to be more helpful to buyers in less expensive markets, said Christopher Thornberg, a principal with Beacon Economics in Los Angeles. That's welcome news especially for those in the Bristol, Kingsport and Greeneville markets.“Unfortunately, in the places that are most hard-hit, like California, it’s going to have less of an impact,” Thornberg said.Dunn says that the local housing economy can and will turn as soon as consumers stop sitting on the fence and start buying. She says the local housing inventory is adequate. So is financing. That's why there so much focus on the housing element of the current stimulus bill.She contends one of the barriers to a revival of the local housing market is many potential buyers are consuming only a diet of national news about housing instead of looking at the local conditions.
Dunn took office as the president of the NE Tenn. Association of Realtors last month. She is the managing broker at Town & Country in Gray.
There's no escaping the fact that the local and regional market has been battered during the last year even though many contend the local market is not as stressed as what one would think if a diet on only national news about the housing problems is consumed. There's more to the housing market story than just the national news, she said Friday.Sen. Johnny Isakson, a Georgia Republican and former real estate agent, introduced the new tax credit as an addition to President Barack Obama’s economic stimulus package. It’s modeled after a similar measure in the mid-1970s.The tax credit’s cost was originally estimated at about $19 billion, but a revised estimate requested by Sen. Charles Schumer, D-N.Y., raised the projected to nearly $36 billion.A tax break passed last summer provides a $7,500 credit to first-time homebuyers. But that must be repaid over 15 years, and the impact on home sales has been negligible.Homebuilders and Realtors argue that dramatic steps are needed to boost the shellshocked housing market. While sales of existing homes rose unexpectedly in December, prices are still falling rapidly. The nationwide median sales price plunged to $175,400 in December, down 15.3 percent from $207,000 a year ago, and the lowest since May 2003. Sales of new homes, meanwhile, fell in December to the slowest pace on records dating to 1963.Lawmakers in the Senate appear to be falling in line, even as moderates from both political parties worked Thursday to trim as much as $100 billion from the stimulus legislation and clear the way for its passage as soon as Friday.With the economy showing fresh signs of weakness Thursday, Obama said: “The time for talk is over. The time for action is now.”But lawmakers faced criticism for aiding homebuyers and not renters or those made homeless as the economy deteriorates.Sheila Crowley, president of the National Low Income Housing Coalition, questioned the decision to subsidize home purchases when housing prices still remain out of the reach for much of the working class.