Initial homebuyer tax credit numbers are inby Tim Manni
The homebuyer tax credit is getting its second wind…or should I say third wind? The homebuyer tax credit has been back in the news ever since HUD Secretary Shaun Donovan failed to give a reporter a straight answer when asked whether the administration was considering a third tax credit.
Yet while the tax credit may be in the news again, the general consensus — coming from sources as diverse as writers to home builders and realtors — is saying it shouldn’t come back:
Richard Dugas, the chief executive of homebuilder PulteGroup Inc., had this to say earlier this month on an earnings call:
Almost regardless of how future demand plays out, we still believe that the tax credit had to end. We need to know the true level of demand without government stimulus distorting the market so that we can continue to properly position our business for ongoing improvement.
The tax credit has been credited with propping up home sales and distorting home sales all at the same time.
The Government Accountability Office (GAO) has released its report on how many homebuyers took advantage of the credit so far, and how much it cost us:
1 million buyers have claimed $7.3 billion of the repayable, $7500 tax credit for first-time buyers.
2.3 million buyers have claimed $16.2 billion of the $8,000 and $6,500 tax credits for first-time and qualified repeat buyers.
Of the 2.3 million claims, 1.7 million buyers claimed the $8,000 first-time buyer credit for $12.1 billion. 600,000 claimed the $6,500 tax credit for qualified repeat buyers for $4.1 billion.
The GAO also reported the claims by state. Unsurprisingly given their respective sizes, California, Texas and Florida top the lists for total tax credit claims and dollar amounts. Nevada had the highest dollar amount of credit claims per resident.
The GAO’s report doesn’t account for every borrower who took advantage of the tax credit, since a portion of those who received the credit this year won’t be filing their 2010 taxes until next year.
So since it began in 2008, the homebuyer tax credit helped 3.3 million homeowners and cost us $23.5 billion (so far)…was it worth it?
We’ve been thinking a lot about the tax credit’s impact on home sales and wondered, has the tax credit distorted the marketplace to a point where we actually need another one? Would a third offer be the charm? (We’ll be discussing our ideas on that more next week.)