Home buyers tax credit program stalls
byMar 9th 2010 1:30PM
When it comes to trying to fix the still very much ailing real estate market in this country, it really doesn't seem as if the government can do anything right.
We've known for a long time now that its mortgage modification scheme has pretty much fallen flat with nowhere near the number of homeowners the program hoped to help actually getting that much coveted permanent loan modification. Now, anecdotal evidence seems to suggest the home buyers tax credit program -- which started strong -- is fizzling out.
This latest slice of bad news comes courtesy of Property Wire, which, among others, reports that real estate agents are saying the special tax credit is "doing little to increase sales."
Initially, the program was to provide a tax credit for first-time homebuyers. It was later expanded to include existing property owners.
Property Wire quotes Robertson Williams, a senior fellow at the Tax Policy Center in Washington, saying, "You've got a really big problem that requires big guns, and the tax credit is just not big enough."
The big concern is that the tax credit, already extended once, is set to expire shortly. It was anticipated at one time that there would be a rush to buy before that time rolls around. So far, real estate agents say they have not seen this development.
In point of fact, home sales (both new and previously owned) actually went down in January.
And, a survey of 50 housing markets by HousingPredictor.com "indicates that the heavy volume of purchases triggered by the tax credit has slowed. The credit boosted home sales last summer and during the last part of 2009 only to fizzle..."
The survey found that only eight of the 50 markets showed any meaningful strengthening of home sales.
While some "experts" express surprise or disappointment that the tax credit program is apparently losing steam, I am neither surprised nor disappointed. In recent months, considering the nation's unemployment and underemployment rate, I thought it was pretty obvious that the program would not accomplish its goals.
Our national leaders need to get a better grip on reality -- if not real estate. People who don't have jobs, or who do but whose paycheck has been dramatically scaled back, are not that impressed by one-time tax credits to purchase a home.
This program, like many of the others aimed at pumping life into the real estate market, does nothing to tackle the real issue: jobs. The administration needs to focus even more of its energies on job creation and stop spending so much time dreaming up schemes to "fix" the housing situation that, so far, haven't really fixed much of anything.
Charles Feldman is a journalist, media consultant and co-author of the book, "No Time To Think-The Menace of Media Speed and the 24-hour News Cycle." He has written about real estate related issues for several years.