Part of a Series
Why not extend the $8,000 first-time home buyers’ tax credit when it expires in November? Everyone loves a tax break, especially one where you can get a quick check from the government. But the Obama administration could do better by targeting the credit to people and places that need it.
A tax credit available to young lawyers in relatively unscathed Houston making $150,000 or account executives in Seattle does nothing to help the parts of the country that truly need buying activity to turn around faltering economies. Home-buying assistance focused on areas of the country that have high levels of foreclosures but are capable of rebounding with a stimulus, such as Las Vegas, Miami, and Oakland, would do more to address the need of such areas hard hit by foreclosures, and would work faster than the current diffuse credit.
Just as mortgage interest deductions now phase out at higher price levels, a ceiling on the price of eligible homes as a way to target the credit would make sense. Similarly, if the strongest argument for the credit is the need to move stagnant home sales in hard-hit communities, then the credit should be concentrated to areas where local markets have high levels of foreclosures ans truly need stimulus.
It is undeniable that actions to break the downward cycle of foreclosures and neighborhood destabilization remain critical to the nation’s overall economic recovery. The current home buying credit has this potential, but as it currently exists, it takes too scattershot an approach at too high a cost. The country deserves better.
For more on this topic, please see:
- The Danger of Untargeted Home Buying Credits, by David Abromowitz