First-time home-buyer tax credit of up to $8,000 is expiring in November. Should this program be extended or expanded to all home buyers? Should it be increased to $15,000? Was is a temporary fix or has it helped the economy? What's your view?
At first blush, free money (tax credits) are always appealing. But, we are at a point of national debt where we must consider the cost and benefit of every dollar borrowed to stimulate our economy. I do not think we get a big enough return on our investment with this program. It locks the tax credit into a home without creating a stream of future additional economic benefits. I will post an article (at artofsaving.com) that future explains my thinking.
I think it should be for all buyers, and it should be a percentage of the appraisal price. California and Alabama are certainly not the same "first home buyer" market prices. And many states are regional, such as LA and desert California. Does $8K do much in SF or NY or Boston?
My bet is that the tax credit will be extended beyond the current November deadline. It has helped move some of the lower end inventory and the overall market in general, as it creates a domino effect for those who are selling homes to be able to move up to the next price level.
It would have been more effective if it had applied to all buyers as far as stimulating the housing market. It would help the housing market to extend it, allow all buyers to be eligible, and increase it--BUT the economy must recover with banks lending money, unemployment numbers decreasing, consumer confidence increasing, and the number of foreclosures decreasing.
I think the program it should be extended for at least another year, till December 31 2010 , to help buyers and the economy to recover. The amount of $8,000 is fine, we don't want to get caught in the same mistakes from the past.