With the federal $8,000 first-time home buyer tax credit nearing its final countdown and the debate heating up over whether to extend and perhaps expand the program, Big Builder Online recently surveyed its readers about where they stand on the issue.
The majority of respondents--91.4%--said they believe the tax credit should be renewed. "It is the only real incentive that provides financial assistance immediately to borrowers, especially in states where the credit can be monetized at closing, but it needs to be extended in operation and scope to have a more significant impact like the credit used in the mid-1970s that went beyond first-time buyers," noted one respondent.
Only 7.1% of the respondents disagreed, and 1.4% said they are unsure.
"I'm torn between the fact that I work in the home [building] industry, and I know that it is keeping some people employed right now and the fact that it is coming out of taxpayers' dollars. I know that we need to buoy the economy, but I'm not sure if this is the way to do it ... we can't keep paying money to people to purchase cars, homes, etc. They need to take responsibility and do it because that was what they were going to do," said another respondent, who is on the fence about the extension and/or expansion.
Respondents also are fairly optimistic about Congress extending the tax credit program. More than half--55.7%--said they think it is somewhat likely, and 18.6% said it is very likely.
"They're more likely to pass it now after seeing how effective Cash for Clunkers was for helping the auto industry," one respondent noted.Only 2.9% said it is very unlikely that the program will be extended, with 22.9% saying it's somewhat unlikely.
Of the recent bills circulating Capitol Hill regarding the home buyer tax credit program, more than three-quarters of the respondents--78.6%--said foremost they would want to see the tax credit be expanded to all buyers of principal residences. "While the tax credit has brought new buyers into the marketplace, move-up or move-down buyers also need the assistance," said one respondent.
Respondents also said they favor increasing the value of the tax credit (35.7%), lifting income caps (27.1%), and allowing the credit to be applied against the previous year's taxes (21.4%). Only 8.6% said the existing program should remain the same.
As for the timeframe, 51.4% said if the tax credit is extended, it should be for six to 12 months. However, 22.9% said they would like to see it extended for 12 to 18 months, 10% for 18 to 24 months, 8.6% for less than 6 months, and 7.1% for more than 24 months.
"Run it another six to 12, and evaluate the market and the U.S. economy. A lengthy credit doesn't create urgency to dry up inventory levels for new home and resale sellers, buyers can wait to 'think about it,'" said one respondent.Another respondent countered, "We are in the worst economic downturn since the Great Depression, and it will take more than one year to get out of this."