Dennis Norman
By: Dennis Norman
Results have just been released of a study conducted by Rosen Consulting Group as to the effectiveness of the 2009 first-time-homebuyer tax credit and the potential need for an extension of the credits.
The Rosen Consulting Group was retained by Fix Housing First, a coalition that was originally working to convince Congress for a housing stimulus package
that they feel would have a more significant then what was ultimately passed, and since has been working to get the tax credit extended beyond its current expiration date of November 30, 2009.
The study noted that “facing the most significant economic crisis since World War II, Congress and the White House passed the Housing and Economic Recovery Act of 2008 in an effort to provide support to the contracting economy and beleaguered housing market.”
The study went on to say that the first-time homebuyer tax credit has been the “primary cause” of the recent return of buyers to the for-sale housing market. This increased activity help the seasonally adjusted annual rate of existing home sales reach nearly 4.9 million homes in June, an 8.9 percent increase from January, 2009. In addition, the National Association of REALTORS Pending Homes Sale Index reached 94.5 in June, an increase of 17.7 percent from January, 2009. The study credits the tax credit with these positive results as “many of these purchasers are first-time homeowners, responding to the tax credit and improved affordability.”
The effectiveness fo the tax-credit among low and middle income households can be seen by the reduced housing inventory in the lower prices according to the study. In June 2009, the months of supply of homes priced less than $300,000 fell to 6.0 months, down 25.96 percent from 8.1 months a year ago.
The study points out the housing market conditions are still very challenging and the “if the tax credit expires, it is likely that lender-owned properties will quickly increase available supply as buyer demand retracts, particularly among low and middle-income families.
“Without demand stimulated by the tax credit, sales activity can be expected to return to the low levels of earlier in the year as households struggle with the threat of job loss and consumers remain unconvinced of a rebounding economy” cautions the report. Finally, the report points out how critical it is for housing to get back on it’s feet to help lead our economy out of recession noting “a recovery in the residential market has led the nation out of recession in nearly every economic recovery of the past 40 years.”
Fix Housing First is now asking interested parties to take a moment to weigh in and let the White House and Treasury Department know that the homebuyer tax credit is working and to urge them to extend it as well as expand it to apply to more than just first-time homebuyers. If you share this sentiment and can spare about 30 seconds then please click here to send your message!
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