NYT: Fight to extend the house tax credit
It’s perhaps no surprise that the National Association of Realtors is fighting to extend the tax credit for homebuyers. They also want the credit enlarged and they want it to apply to everyone. From NYT:
The real estate industry, including the powerful 1.1 million-member National Association of Realtors, wants Congress to extend the credit at least through next summer. The group hopes to expand the program to $15,000 [from $8,000] and to allow all buyers, not just those who have been out of the market for at least three years, to qualify. The price tag on that plan: $50 billion to $100 billion.
Deductibility of mortgage interest is already a huge tax subsidy for home buyers. And the $8,000 first time credit is expected to cost $15 billion this year while resulting in only 350,000 home sales that wouldn’t have otherwise happened. That’s $43k per. Give ’em an inch, they’ll take a mile.
[Update: A readers asks how the math works in the paragraph above. The credit was used for up to 2 million sales. But of those, only 350k wouldn’t have otherwise happened. Since the goal of the program is to spur home sales that wouldn’t happen organically, then the cost of the program is best described in terms of incremental transactions. $15 billion spread over 350,000 extra home sales is $43k per.]