Housing Industry: Tax Credit Would Boost Sales

Submitted by Ronald Tennant with Metrocities Mortgage:

Birmingham Business Journal (05/19/08); Hoover, Kent
The National Association of Realtors (NAR) and the National Association of Home Builders (NAHB) are lobbying in favor of a tax credit for first-time home buyers, which was included in legislation recently passed by the House. The one-year tax credit of up to $7,500 would provide down-payment funds that would be repaid to the government over a 15-year period. NAR chief economist Lawrence Yun predicts the credit would boost home sales to 6.5 million per year from 5.5 million, calling it "a restoration of home sales to the pre-boom years." While NAHB predicts a more modest jump in sales of 100,000, CEO Jerry Howard says the tax credit would allow existing homeowners to sell to first-time buyers and trade up. Howard hopes the Senate version will forgive a portion of the tax credit based on how long homeowners remain in their homes or boost the amount of the tax credit while shrinking the period of time it is available in order to further stimulate the housing market. However, the Bush administration says it will veto the package if changes are not made, as it opposes a provision permitting the refinancing of $300 billion in problem mortgages by the FHA.