Will new tax credit spur home sales?
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KAI RYSSDAL: We have been hoping against hope for what seems like forever now that the housing market’s about to turn around. And there was a glimmer of a chance last month when the December number for what are called existing home sales ticked upward just a little bit. Well, that hope was dashed today.
The report for January that came out this morning shows those sales declined faster than expected in January — down where they haven’t been in a dozen years. I’m sure the Treasury secretary’s schedule was set before that number came out, but it certainly gave a boost to his communications staff today.
Timothy Geithner went on the PR offensive this morning, plugging an $8,000 tax credit for first-time home buyers that was in the stimulus bill. The White House is counting on that credit to bump the housing market, since the government’s figures show nearly half of all buyers last year were first-timers.
From North Carolina Public Radio, Marketplace’s Janet Babin reports:
JANET BABIN: The $8,000 tax credit is available to first-time buyers all year, and it doesn’t have to be paid back. Some states even allow the money to be handed out like a rebate at the home-sale closing.
The Administration hopes the money will spur first-time buyers to sign their lives away on a home mortgage.
Carey Ahr of Frederick, Md., wants to be one of those property virgins.
Ahr says what he really needs is downpayment assistance:
Carey Ahr: I don’t have a lot of money saved up. The last few years I’ve been paying off credit card debt.
Unfortunately, paying off your debt or help with a downpayment is not part of President Obama’s housing plan. But it does include measures to reduce home foreclosures. And the Federal Reserve is trying to drive down interest rates on mortgages.
Real estate analyst Mike Larson at Weiss Research says the incentives will make a bad housing market a little bit better. But he’s says don’t expect a buying frenzy:
Mike Larson: You’ll see some buyers, maybe, that were already considering buying take advantage of that tax cut, but it’s certainly not going to spur a huge new wave of home buying, in my opinion.
Larson says the real reason people have stopped buying homes is because they lack job security in an uncertain economy:
Larson: The average American’s worried they’re not going to have a job next month or next year. They’re just not that likely to buy a house ’cause they’re afraid they’re income’s going to go away.
But spring is the traditional home buying season.
Most analysts expect some sort of sales bump from the tax credit — by late spring or early summer.
I’m Janet Babin for Marketplace.
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