Housing markets across most parts of the United States are facing their greatest downturn since the great depression.
The National Association of Home Builders (NAHB) has proposed to Congress an additional stimulus package that I believe actually has a chance to make a real difference. This new stimulus package would create a tax credit for the purchase of a home.
Recently, NAHB chief economist David Seiders told the Senate Finance Committee that "Tax credits for the purchase of a home are a means of eliminating excess inventory, relieving some of the pressure on falling housing prices and ending the waiting-on-the-sideline strategy some potential buyers have adopted in response to overly negative media stories concerning the future of the housing market".
I know here in Metrowest Massachusetts there are plenty of buyers sitting on the sidelines waiting to see what is going to happen in the Real Estate market. Who can blame them? Every week the media presents consumers reasons to remain on the sidelines. Market values of homes have been dropping and the data and activity support the notion that we have not hit bottom yet.
If I was a 1st time home buyer I would be watching too. Over the last three years home values have dropped approximately 15% in my home town of Hopkinton Massachusetts.
A 1st time home buyer tax credit would get people that are sitting on the sidelines watching, off the dime! The 1st step in reducing current inventory levels is to introduce more demand into the market. Providing an incentive to 1st time home buyers will create a domino effect. Home owners who are waiting to purchase another property and are not able to until they close on their current home would benefit and continue to stimulate the market by purchasing another home.
There are a few other Senators that have proposed similar tax packages. For example, Senator Debbie Stabenow of Michigan has introduced a bill called S. 1988, legislation that provides for a temporary, one-time refundable tax credit for first-time home buyers of 10 percent of the purchase price of a principal residence.
Senator Johnny Isakson of Georgia introduced S. 2566, a bill creating a one-time $15,000 tax credit for buyers of a single-family principal residence that is a new home or a home in default or foreclosure purchased within a one-year time period.
These new policy's are great because they create demand for housing. These are the types of programs that will make a difference for Real Estate markets across the country.
*****UPDATE*****
Well it looks like the government has finally got their act together and has provided a meaningful stimulus package. As of February 2009 a 1st time home buyer tax CREDIT has been introduced. As modified in the American Recovery and Re-investment Act, you will find the major modifications shaded.
The chart represents what the lastest package covers including the $8000 tax credit. What must be emphasized is that this is a tax credit and not a loan that needs to be paid back!!
One of the best resources that I have seen on the new 1st time buyers tax credit comes from The National Association of Home Builders website. It is located here at the frequequently asked questions about the home buyer tax credit.
As of July 14, 2009 Massachusetts has also instituted a program that allows a 1st time buyer to use the tax credit towards the down payment or closing costs. You can see all the details of this program at Massachusetts 1st time buyers tax credit
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About the Author: The above Real Estate information on 1st time home buyer tax credits was provided by
Bill Gassett, a Nationally recognized leader in his field. Bill can be reached via email at billgassett@remaxexec.com or by phone at 508-435-5356.
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