Tax Credits Have Been Expensive and Effective

As the home buyer tax credits near their end on April 30th, National analysts are surmising that the incentive program was both expensive and successful.

The Treasury Department estimates that the tax credits helped 1.8 million people buy homes, however critics point out that two-thirds of the $12.6 billion in credits through the end of February went to people who would have purchased a home anyway.

Sen. Johnny Isakson, a Republican from Georgia, who worked as a real estate practitioner for 30 years and pushed through the 2010 extension and expansion of the program, says: “It’s true that a lot of people who got the credit might have bought without it, but they might have bought in 2012 or 2013. This got them to buy in 2009 and 2010, when we needed to shore things up.” So, where does that leave us for the 2011, 2012 & 2013 markets? Hopefully, with the improvement in the overall economy and unemployment on the decline there will be a whole new set of buyers in the marketplace.

Economist Mark Zandi agrees. “The tax credit helped to stanch the price declines, which had substantial benefit for the entire economy," he says. "The home is still the largest asset on most people’s balance sheet, so when prices are falling, nothing works for most families.”

Contributing Sources: The New York Times, David Kocieniewski (04/26/2010)

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