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Did First Time Buyer Tax Credit Help Sellers?

Monday, September 28, 2009 posted by Tommi Crow

The $8000 Tax Credit for first time home buyer’s (people who have not owned a home in the last 3 years) expires on November 30, 2009.    With the expiration date drawing near, the Realtor and builder lobby groups are pushing lawmakers to extend the program for another 6 months.   If they are successful, it will cost taxpayers of nearly $15 BILLION.  

“Yea” or “Nay”???    Before we cast our vote, we decided to find out whether the tax incentive successful or not?  Specifically, did it persuade people to jump into the market?   Would it be a good investment for taxpayers going forward?

According to a poll conducted by Zillow, the tax credit was persuasive.

  • 18 percent of home buyers said the tax credit was the main reason they pushed to buy a home before November 30, 2010.
  • Based on the number of first time buyer’s in the marketplace, a 6 month extension could persuade another 335,000 (18 percent) buyers to buy a home of their own.
  • If the first time buyer credit is extended, home sales would likely increase 5 percent.  Without it, sales would be down as much as 2 percent.
  • Only 31 percent of first time buyers said the credit had no influence on their decision to purchase. 
  • 69 percent of buyers said the tax credit was important in motivating them to buy a home this year.

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