Was Homebuyer's Tax Credits Worth It?
STEVE INSKEEP, host:
This is the last day that you can sign a contract on a new home and qualify for the government's homebuyer tax credit. The credit, which is worth up to $8,000, was aimed at stabilizing the housing market, but critics say it is expensive and may not have a long-lasting impact.
From member station WBUR in Boston, Curt Nickisch reports.
CURT NICKISCH: Let's just say Bryan Ashley is rejoicing.
(Soundbite of music)
NICKISCH: That's church organist Bryan Ashley practicing late at night at Boston's First Church of Christ, Scientist. He spent business hours lining up a home loan.
Mr. BRYAN ASHLEY (Organist): So between house-hunting and practicing, that's pretty much been my life for the last few months.
NICKISCH: This week, Bryan and his wife signed on the dotted line for a cozy duplex on a little hill in Boston's Jamaica Plain neighborhood, just in time to get the $8,000 credit.
Bryan says as far as their decision went, the tax incentive just gave them a deadline.
Mr. ASHLEY: We would've been buying, anyway.
NICKISCH: With the eight grand, Bryan and his wife might buy new furniture or do nothing at all.
Mr. ASHLEY: Yeah. I didn't do the cash for clunkers, so I guess it'll go for the house.
(Soundbite of laughter)
Mr. JOHN MAXFIELD (Realtor): I've been working 16-hour days.
NICKISCH: John Maxfield is a Boston realtor. He says the April 30 deadline has made life hectic.
Mr. MAXFIELD: I was here until very, very late last night, once again. It has, in fact, created quite a flurry.
NICKISCH: Maxfield says every market's different, so the tax credit might be stoking more new sales in harder hit areas. But here in Boston, he says, the housing market was already recovering.
Mr. MAXFIELD: So we've had this pent-up demand, low interest rates. The sellers became more realistic, prices dropped. So we were doing fairly well and didn't really need the incentive, but the incentive certainly helped our market out.
NICKISCH: How much it's helping the economy out is another question. Chip Case is an economist whose Case-Shiller Index tracks national housing prices.
Mr. CHIP CASE (Economist): The thing about the credit is you don't get a lot of bang for the buck.
NICKISCH: He says the tax credit has been very inefficient, especially since it was extended last year to existing homeowners, too. Case says it mostly just sped up sales. He's not sure the housing market will really recover until more people get jobs.
Mr. CASE: I don't think the tax credit's going to do a lot one way or the other. I mean, we're either going to have a good spring market or we're going to have problems, and the two months we're going to tell a tale. I think we're going to be flat to up. But I say that with absolutely no conviction.
Mr. LAWRENCE YUN (Chief economist, National Association of Realtors): This is a great success for the U.S. economy.
NICKISCH: Lawrence Yun has stronger convictions. After all, he's the economist for the National Association of Realtors. He says it may cost $35 billion to create just one million truly new home sales, but the tax credit is priceless for bolstering confidence in a turnaround.
Mr. YUN: So from broader point of view, stabilizing the middle class wealth, stabilizing the financial sector is well worth the tax credit that was expended.
(Soundbite of raking leaves)
NICKISCH: One of the people who got the credit is Raymond Quenneville of Merrimack, New Hampshire. He's raking the front lawn of the house he bought last year. The money came in handy.
Mr. RAYMOND QUENNEVILLE: One of the things the inspector missed was the roof was in worse shape than we thought. And so the tax credit went straight to -you know, just as President Obama would've liked it, went straight into the market and we bought a new roof over the fall.
NICKISCH: Quenneville hopes that when the program ends, the housing market will continue to pick up. It would be a shame if the government spent billions to get people to buy homes only to see values drop again.
For NPR News, I'm Curt Nickisch, in Boston.
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