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Getting the Tax Credit Extended: Outlook

By Robert Freedman, senior editor, REALTOR® Magazine

What are the chances of getting the first-time home buyer tax credit extended, particularly before its expiration Dec. 1? No one can know that, of course, but what’s clear is that the leadership in Congress wants it extended—and if you have the leadership on board, you’re in a strong position. Yet with health care reform consuming Congress’ attention, even the leadership faces a challenge ensuring the tax credit gets the consideration it deserves.

After sitting down with Linda Goold, NAR’s director of tax policy, and Samuel Whitfield, an NAR legislative representative, I learned the tax credit has really been the economic recovery’s workhorse. The IRS says 1.4 million households have used the credit. What’s more, a number of independent looks at the credit, including one by Economy.com (owned by Moody’s) and Campbell Surveys, estimate that between 350,000 and 400,000 home purchases would not have happened without the credit. NAR has come up with a similar estimate.

Goold and Whitfield say there’s bipartisan support for extension, and NAR is on Capitol Hill daily reminding lawmakers that the clock is running. But it’s coming down to the wire.

Robert Freedman

Robert Freedman is director of multimedia communications for the NATIONAL ASSOCIATION OF REALTORS®. He can be reached at rfreedman@realtors.org.

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Comments
  1. Dan

    Why is NAR so willing to to spend my grandchildrens’ money just to goose up sales and Realtor(R) commissions. Shame on NAR and its self appointed (as a member I never was given a ballot for national leadership elections) leadership for putting future generations in debt just to put some of their money in their pockets. This does not mention the fact that government intervention affects market value of property vs normal free market value. But hey that is why NAR has declared war on appraisers. Need I go on?

  2. Janine olga hol

    we need the tax credit extencion so the sales of homes keepn going.

  3. John

    Dan Holman you are a bitter old man who hates Realtors

  4. I would like to see it extended because we have new buyers come out in the latter part of the year who will like to have the same incentive. Furthermore, I believe another year will not hurt but only enhance the economy being that people want to have an option not to just choose anything in order to claim the tax credit.

  5. Kevin

    I am a Realtor and let me tell you, spending 8,000 per a homes is the best ROI that the government has seen in a long time. You will be spending your granddaughters money keeping you alive by having National Hearth Care. Any comment on that or do you actually believe the garbage from Washington. If you have not noticed there are more Real estate agents quitting the business everyday. They have family’s to feed but we do not get unemployment. The strong, hardworking will survive. How can intervention affect a supply and demand market. Its called Economics 101 and last time I looked Supply is UP!

  6. Sure, the tax credit helps me find buyers but it seems like just another way to keep the foreclosures going. Home ownership is it’s own credit and you should have to have 10% down to take advantage of it. PERIOD. Give people a real reason to keep their homes… like their own money!

  7. Lynn

    Actually Dan, I showed a client a For Sale By Owner house today in order to help her purchase a home prior to the November 30th deadline. No, I will not be paid a dime of commission off the sell. It’s about getting deserving people into houses and educating consumers.

  8. Audrey

    Dan would rather see the banks get his grandchildren’s money.
    I agree with Kevin, the first time home buyer tax credit has the best ROI than anything the government has done in my lifetime. The majority of buyers I have worked with are investing that money back into their homes. This puts money into the local economy, provides jobs and tax revenue!
    Personally I like seeing hard working tax payers benefit from the government instead of “big business” and lazy dead beats!

  9. Brian Burry

    The Tax Credit of $8,000 should not only be EXTENDED, it should be for all Buyers for one more year. Since 20% of the nation’s economy revolves around real estate – not just Reators “Dan” – but actual economic growth benefits. Consider the entire myriad of professions and jobs affected by increase sales; Sellers – who can move up and/or invest in the US Economy, Buyer’s needing that help to fix up some homes that would not sell as easily due to their deferred maintinence condition, Escrow and Title Companies, Lenders – both banks and mortgage brokers, Appraisers, Third Party Inspectors, Pest Control Companies, painting contractors, flooring contractors, appliance makers, Home Improvement Stores, schools with additional student/revenues, county assessor’s taxes, property taxes, sales taxes from neighborhood stores not to mention sports, entertainment, grocery store increases in sales ALL DUE TO NEW BUYERS. If you don’t see why Real Estate is the “Engine of the US Economy” then one must just not be very aware of the long term economic effects of home sales. Do Realtors “Earn” their commissions with all of the representation, disclosures, inspections and work required to qualify, make offers, work escrows and assist buyer’s with their individual needs to a successful closing – absolutely! However realizing the above it has been reported that a sold house versus a long term vacant home boosts the entire economic impact of a community and that is why the tax credit MUST be extended – only make it all buyers to really have a solid impact. Being an active Realtor is a very worthy and valued profession and I for one am proud to be one! Clovis, California

  10. Judy

    I agree it’s totally about helping people who are qualified get into a home for an affordable price. Even though this year has predominantly been made up of first-time home buyer transactions, thus decreasing earnings for most Realtors as well as a lot more work, you can’t put a price on the joy many of the clients have found in being able to purchase a home and get $8k too! It is a very rewarding time to be a Realtor and continuation of the tax credit will only help the economy further!

  11. There is far more at stake than just Realtor commissions. Maybe NAR recognizes this, Dan. The US economy is driven by consumer spending, automobiles, and homes. Every time a real estate transaction happens, think of the expenditures on everything from extra clenaing supplies to furniture — so it’s 2 of those 3 drivers being stimulated at once. Home sales, and all that is related to them, is a huge economic engine.

  12. Not only will an extension boost home sales but it will also help those people that are or may be facing forclosures. And if this credit could be opened to all buyers it will allow those taxpayers to get the home they have always wanted. Our job as Realtors isn’t all about the commission but helping our clients fulfill they’re wants and needs. The extension will also help create jobs especially needed in those states that have continued high unemployment.

  13. JanDG

    Well, count me in as a bitter old man too. According to studies of recent buyers, when those who would have purchased with or without the credit are subtracted from the total, the cost of the credit is $43,000 per buyer not $8,000. This, of course, increases government debt (which is ultimately personal debt) and reduces taxes to service that debt.

    I’ve been a broker for 33 years and have watched my profession repeatedly promote and advocate government and personal irresponsibility.

    Press on. I don’t see our actions changing anytime soon but please spare those of us who are looking at the bigger picture the name calling and posturing.

  14. At 1.4 million tax filers receiving the tax credit, this is probably a total expenditure of just under 10 billion dollars. (1,400,000 X $8,000 = $11.2 billion and not all received the maximum.)

    What a bargain compared to the benefits! If the ORIGINAL idea of a $15,000 credit for everybody would have been included in February, the total cost was estimated to be around $40 billion. Guess what… we wouldn’t have had to throw $700 billion at the financial institutions if we had done the tax credit right in the first place. This would have stabilized home values and provided a tremendous jump-start to the economy as a whole.

    Not only should this program be extended – it should be expanded. Urge your elected representatives to do the right thing for our country and stabilize home values.

    A home buyer tax credit will do more to stop foreclosures than any program that will only delay the inevitable if values continue to fall. Funny how people found a way to pay their mortgages when they had EQUITY in their homes and values were rising. They will quit doing strategic walkaways and pay their mortgages again when the values are stable to rising moderately!

  15. carol dartez

    Situation: recently divorceed woman purchased a home in her name. Does she qualify for 1st time homebuyer even though she and her ex-husband owned a home together. Thanks,

  16. The has been a study showing the average home buyer puts $62,000 into the economy. I do not think the public realizes how many people we put to work every time a house sells. From the lender, title company, appraiser, surveyor, untility company, inspector and the list gors on.

    I have to think $8000 is a small price to pay to reap $54,000 into the economy which equals jobs and the cycle continues.

    You may not like Realtors, I do not like the Dentist but we all serve a purpose in this world and the good news is we all get a choice in who and what services we use.

  17. Stephen

    Go my man Dan…This is another give away that does nothing to solve the underlying problems facing our industry. But who cares because its our kids who are going to paying the burden. Sounds a lot like the way we got into this difficulty in the first place!!!

  18. Interesting study Mary Beth. Would you send me a copy from it.

  19. Ron Rovtar

    There are indeed times when the government must step in and keep the economy from falling off a cliff. The last year has been among those times. Unfortunately, pulling the plug on a needed program like the first-time homeowners tax credit can be a big mistake if it happens too early or too quickly. We’ve seen what can happen. Car prices sales have fallen to their previous levels now that the “cash for clunkers” program has ended.

    As we know, NAR is promoting an extension of the housing tax credit. Perhaps it would be good to also push for a scheduled phase-out of the credit instead of a “tough love” style ending date. Most likely, a soft landing would have a less serious impact on home buyers, the economy and the real estate industry.

  20. Lilly Hughes

    Kevin and Brian both have expressed my thoughts. Why limit this to 1st time homebuyers? And this program can’t begin to cost what health care reform will.

    $8,000 per home vs ???? how much for one surgery? One trip with injuries to the emergency room?

  21. Travis

    I love how everyone has an opinion and guess what I have one to. I am a bulider/ realtor builder first. Realtors have been geting great commisioons along with builders in the past ten years. the problem I have is realtors get almost as much as a builder now days and have no warranty or liablilty for the most part. Yes I do understand you spent a lot of time showing and coddeling your buyers, But when something goes array and I am talking about new housing, the builder is left to handel the owners for not much more than a realtor gets. With putting a lot of up front money on the line. I have a development that we are sellling homes new homes for virtually cost just to make appraisalls. and when all is done and said the realty makes more than I do and I have to warranty the home. I really do not have a problem with realtors I ahve a problem with the brokers. This is an issue I think that may need some attention. Agian no Offense and just a Opinion . I do love reading everyone elses that I believe is how change comes about

    Thanks for your time. Travis

  22. Tom Dooley

    The should extend the credit, make it available to everyone and give a credit to people who need to refinance. They should make the credit permanent. We should find more ways to incentive people’s initiative to better themselves. Populations are growing. You have to find more and more ways to efficiently seed the consumer markets. The great benefit of the “credit bubble” was that people really hustled. People reached for the brass ring. Cottage industries were born. Most all the money works its way back to the government. The government needs to find more efficient ways to distribute to the people incentivizing doing that right thing. There is no “creatiion” of wealth, only the distribution, the distribution of the energy of people. Thank goodness we are not on a gold standard because everytime someone would go to get a house a poor slave in another country would have to mine x amount of gold so someone could get a mortgage. Money is created out of thin air as a representation of a need and desire that we have and a way to show a token of appreciation for the exchange that was made. What I saw with the boom was people buying furniture, people making the furniture, people starting little business, people using each others services. Maybe in the big picture there was something skewed but it was a beautiful thing to see wealth distributed. I didn’t see people getting lazy. I saw people’s creativity spurred to pursue their hopes and dreams. Find ways to distribute the “money” to keep this flow going. One thing that caused Rome to fall is that it ran out of an efficient way to distribute the coins. We have the opportunity to move toward to an even greater abundance than we have seen before. Why should we quibble about health care? People get more health care, more doctors and nurses go to work, it is all good. Why can’t we even make cosmetic surgery available to everyone, more jobs, more money, etc. If you really think you want to go back to being a farmer, try it for a summer.

  23. I beleive the tax credit should be exspanded to included all buyers even real estate investers, but it should resemble the tax credit of 2008 where it has to be paid back over a period time interest free so buyers can make a choice to take it or not. I beleive even with a pay back in place many people will still take advantage of it and use it to fix their new home up or buy furniture or what ever they will spend it and boost the economy and with the pay back it will not cost the tax payers much at all, if anything including all buyers it should really be a much bigger jump to the economy.

  24. Ronald

    I will be in favour of extending the buyer tax credit if it is exactly that – a credit to buy a first home. At some point this credit must be repaid to the taxpayer either annually via withholdings or when the buyer trades up to a bigger home. A second factor that must be considered – the underwriting criteria must be strong – that the buyer has sufficient skin the the property and is able pay the mortage. In the current economic environment this second condition is going to be difficult to assess. I would rather see realtors fight to change the stimulus package to incentivise companies to re-invest and re-hire so as to create a steady dependable stream of income. To date, despite VP Biden’s many pronouncements, I doubt that the ARRA ’09 has generated any jobs.

  25. The tax credit has sparked great interest in owning a home. These funds end up going right into the economy, its a win win.

  26. Geo. J. Donaldson Jr.

    As a long time (30 years) real estate broker and one who is in a position to sufficiently gain financially from the government CASH GIVEAWAY, I am very much against the socialist policies of the current US legislators and the leftist IDIOT at the top of the heap. There is no free lunch, somebody has to pay. All the debt is piling up for those behind us, good luck kids.

  27. Bill

    I agree. The tax credit should be extended and made available to all home purchasers and investors. Who better to fill the vacancies created by people unable to afford their home payments than a new crop of people who can’t afford to buy a house unless they get a subsidy. In two years, when the new owners get thrown out of their houses because they can’t make their house payments or cash for clunkers car payments, we can repeat the whole process. It’s a great time to be a Realtor and a car salesman!!! In Government we Trust!

    While we’re on the subject, why should first time homebuyers be the only ones to buy something they can’t afford. I should have the right buy something I can’t afford too.

    I’m a Realtor, but I’m also a taxpayer waiting for his tax hike to pay for everyone’ s free ride. I’m sick of my taxes rewarding bad behavior and I’m tired of Realtors promoting that behavior. I have to laugh about our Code of Ethics. Apparently it’s unethical to screw our clients, but it is ethical to help, encourage and enable our clients to screw themselves. Go figure.

    While we’re on the subject, many comments use the term “deserving homebuyers.” Who on this planet DESERVES a house? In my world, if you can’t afford it, you probably don’t deserve it.

    Yes, I know the market needs improving, but I think there’s a way to do it without creating future problems.

    Bill

  28. William Schiel

    Extending the credit is not enough. In fact, the topic should be about expanding the credit. It needs to be expanded to include all buyers of a principal residence.

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