Legislation introduced in the Senate Thursday aims to extend the $8,000 first-time home buyer tax credit by six months. The bill, S.1678, was introduced by Sen. Ben L. Cardin, D-Md., and co-sponsored by Sens. John Ensign, R-Nev.; Harry Reid, D-Nev.; Johnny Isakson, R-Ga.; and Debbie Stabenow, D-Mich.
The current tax credit, passed as par of the American Recovery and Reinvestment Act, expires Dec. 1. The National Association of Realtors says the credit sparked 350,000 home sales this year. According to Treasury data, nearly 530,000 people have applied for the credit.
"As we are fighting to get our economy back on track, we cannot afford to let lapse an important tool that has had a positive effect on the housing market," Cardin wrote in a message on his Web site.
The Mortgage Bankers Association not only wants to see the credit extended, but also expanded, according to comments from MBA Chair David Kittle that appear on USA Today's Web site. Kittle opined that Congress "should extend it to all home buyers and increase the credit up to $15,000."
"In addition, Congress should make it available immediately, so that a borrower doesn't need to wait until his or her next tax return, but instead can use it to help make a down payment on the house or pay closing costs," he wrote.
A Washington Post editorial published Saturday takes a different perspective on the tax credit, arguing that continuation of the subsidy will only make it more difficult to wean the housing market off its dependence on federal support.
"[L]ike Cash for Clunkers, the housing credit does not magically generate demand. It moves demand around – from the future to the present, and from other consumers, and other sectors, to home buyers and homes," the editorial says. "These "results' don't come for free. Cash for Clunkers added $4 billion to the federal deficit, and the housing tax credit is on track to add $15 billion."
SOURCES: Office of Sen. Ben Cardin, USA Today, Washington Post