Support Surges for Home Buyer Tax Credit Expansion

Trade associations and U.S. Reps line up behind extension and expansion of the home buyer tax credit

By Mark Jarasek, Senior Editor, Electronic Media
October 22, 2009
HousingZone

The pressure is on Congress to extend or expand the $8,000 home buyer tax credit beyond its Nov. 30 expiration. Within the past few weeks, two major housing trade associations, the National Association of Home Builders (HAHB) and the National Association of Realtors (NAR), have petitioned congressional leaders to keep the program running. In addition, a letter signed by 165 Members of Congress was delivered Oct. 21 to House Speaker Nancy Pelosi and Minority Leader John Boehner urging the extension of the tax credit. However, the jury is still out whether or not the popular tax credit will be kept alive.

“We write you today in bipartisan agreement that the home buyer tax credit should be extended,” the congressional member support letter states. Separately in testimony before the Senate Banking Committee on Tuesday, Committee Chairman Chris Dodd (D-Conn.) voiced his support for the tax credit saying that the “work of stabilizing the housing market won’t be done” after the credit is set to expire.

Chairman Dodd and Senator Johnny Isakson (R-Ga.) have proposed an extension of the tax credit through the end of June 2010, as well as proposed expanding it beyond first-time home buyers. Isakson told the banking committee that he believes the entire economic recovery is at stake unless the housing tax credit is extended and expanded. Chairman Dodd added in his testimony that it was important to also stimulate the move-up home buyers. “It’s that move-up market, where you start to get what I call sort of a ripple effect, that is always so important in housing,” he testified.

Isakson estimates that the — cost of his proposal to the government would be $16.7 billion in lost revenue but would have a compounding impact beyond the lost revenue in terms of home improvement investments, as well as appliance, furniture and other purchases related to home ownership.

During its testimony to the banking committee, NAHB took the position that extension of the tax credit would create “hundreds of thousands of badly needed jobs.” NAHB Chief Economist David Crowe warned committee members that builders have been reporting a steep decline in business that was generated by entry-level buyers because new home sales can no longer be completed in time to take advantage of the credit before its expiration date.

NAHB is pushing for an extension of the home buyer tax credit for an additional year through Nov. 30, 2010, and wants it to apply to “all purchasers of a principle residence.” 

“We estimate this would increase home purchases by 383,000 and create nearly 350,000 jobs in the coming year,” Crow told the committee, adding that it would also generate $16.1 billion in wages and salaries; $12.1 billion in business income; and tax income of $11.6 billion for federal, state and local governments.

NAR also took its turn on Capitol Hill. In testimony to the banking committee, NAR First Vice President Ron Phipps described to committee members how the housing tax credit has contributed to the reduction of home inventory and the stabilization of prices. He also pointed out that each home sale generates approximately $63,000 in additional economic activity, which provides a tremendous economic boost to the national economy.

“But it is a fragile recovery, and now is the time to build on home sales momentum by extending the tax credit throughout 2010 and expanding it to all home buyers,” Phipps said. “Without congressional action now, the market and our national economy may freeze again, possibly as soon as this month,” he warned.

The question is still out whether this pressure blitz to extend and expand the credit will inspire Congress to act. A House Ways and Means subcommittee is holding a hearing today to discuss the situation, as several bill sponsored by members of Congress seeking to extend or expand the credit wait to be reviewed. 

Video Reports on Extending the Tax Credit

Congress Debates Tax Credit 

Ron Phipps went to Washington as the first Vice President of the National Association of Realtors in order to put pressure on lawmakers to extend the tax credit.

Today in Washington - Push to Extend Tax Credit 

The Cost of Extending Credit - Senators Dodd and Isakson Want More

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