FED EXITING FIRST HOME BUYERS TAX CREDIT?

2009-10-02T09:00:00.000-07:00

By Sustainable Virtual Services

Over 1.4 million first time buyers have taken advantage of the credit for a cost of around $11 billion. The estimated cost of the program through November is supposed to be $15 billion and extending it until next June would cost another $15 billion, according to Moody’s Economy.com’s Chief Economist Mark Zandi.

Front page Washington Post story today on the November 30 2009 expiration of the $8,000 first time home buyer tax credit and the rush of buyers and the political debate surrounding it. The real estate industry is obviously lobbying hard for an extension and apparently there is a bipartisan proposal to maintain the credit in its current form until next June.

Will the tax credit get extended? What happens to the housing market, and the banks and the economy by extension, if it doesn’t? These types of questions are pertinent given the Fed’s mortgage backed securities purchases as well.

The question remains can the economy survive without all this massive government stimulus of the housing and mortgage markets? Even more significant with over $10 trillion worth of debt, can the U.S. taxpayers afford to support continuing such a program?

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