Not surprisingly, real estate industry lobbiest are attempting a full court press as they make a final push for extension of the first-time buyer tax credit.   

And, it’s little wonder.  The IRS estimates that 1.4 million homebuyers have claimed the credit through August, and the Realtors Association estimates the credit was crucial in pushing 355,000 of those buyer’s off the fence.   

If the real estate industry gets it’s way and the amendment passes, the $8000 tax credit would be extended to June 30th, 2010 and it would allow more taxpayers to qualify for the subsidy.  The amendment would increase the income limit to $150,000 for a single filer and $300,000 for a couple, up from the current limit of 95,000 and $170,000, respectfully.

The Pro’s: Why Vote “Yea”

1. Lenders are still in trouble, as more people default or fall behind on their mortgages.  Experts predict an additional 1.5 million foreclosures in 2010, increasing supply and further eroding prices and demand. 
2. Dems and Rep like it.  The proposal was introduced by a GA Republican, Johnny Isakson, and it is also supported by Democratic heavy-weights.  House speaker Nancy Pelosi and Senate Majority Leader Harry Reid support the extension, President Obama hasn’t taken a position for either side.
3. Still too Many Houses.  Although the supply of existing homes on the market has fallen from 1-5 months down to 8.5 months, a healthy market has only 5-6 months supply of house.
4. Unemployment is Rising.  With national unemployment levels at 10 percent, and some states reporting a far higher number, extending the taxpayer subsidy of housing market would likely create and preserve jobs.  In addition, people out of work usually means more loan deliquency, foreclosures and further downward pressure on pricing.

The Con’s:  Why Vote “NAY”

1. The Cost to the Taxpayers.  The extension comes with a heavy price tag of $16.7 BILLION over 5 years.
2. As bad as Sub-Prime.  Opponents argue that the subsidy has artifically propped up the prices of inexpensive homes, targeted by first-time buyer’s, thereby creating another potential mini-bubble in affordable housing.
3. Both Opponents and real estate industry admit that most people who claimed the $8000 deduction, would have purchased a home anyway due to historical low rates and steep price declines.
4. Fraud.  The IRS has identified over 100,000 cases of fraud involving the tax credit.  On Thursday, the House Ways and Means Committee is scheduled to take a closer look.
5. Did we mention the cost to taxpayers is $16.7 BILLION?

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