About 14 weeks from now this important tax credit is set to expire. The big question is whether or not congress will extend the program another 6 to 12 months. I have experienced first hand the impact of this program since its inception in late 2008. It has been instrumental in encouraging people to buy their first home. In my opinion it has been a very important factor in stabilizing and correcting the housing decline. Since no housing recovery can occur without the first time buyers getting back into the market it stands to reason that until we are fully and completely recovered this program will be critical to the process.
Time is an important issue here as well. Since the home purchase process can take around 8 to 14 weeks from start to finish (including searching and getting under contract) we are now at the point where that window of opportunity may be closing and buyers could be left without the incentive at a time when it is still needed. Economists at the National Association of Realtors have estimated that $63,000 in downstream “ripple effects” is generated on a typical home purchase. That could include things like furniture purchases, landscaping, renovations etc. Even if that number is a little on the high side it is still plain to see that home sales have a significant impact on our economy.
One of the key points that seems to get lost when the real estate downturn is discussed, is that housing is the biggest industry of all, bigger than the auto industry, the steel industry and general manufacturing. When housing is sick, everything is sick. So, the best way to heal housing is to keep important incentives in place that encourage home buying and selling. That in turn will begin to heal the overall economy and we will move more quickly to work our way out of this deep recession. We might want to send that message to our members of congress and encourage them keep working to get this incentive extended. I don’t think it needs to be a bigger credit or more extensive than what it is at this time, but let's at least extend the existing program so more can benefit from it.
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