According to the Government Accountability Office (GAO) the home buyer tax credit will end up costing tax payers $22 billion. About a third of those claiming the credit were trade-up buyers from the most recent phase of the credit, which allowed repeat buyers in addition to the first time buyers. In terms of states’ participation in the credit, California had the most claims. Nevada, Idaho, and Wyoming had the most dollars for the tax credit claimed per resident. Here is a link to a chart showing the dollar amount per resident by State.
There is no doubt that the Tax Credit programs helped kick the industry into gear, though only temporarily. I’m hearing that another dynamic developed: home buyers who missed out on the last two Tax Credit programs waiting in the wings for the next Tax Credit to be announced. Though the two programs created a flourish of activity, they also created a pulling back of potential buyers as soon as they ended. I don’t want to get overly political (and I am grateful for the Tax Credit programs of ’09 and ’10), but this is what happens when government attempts to manipulate the economy. It’s artificial, the benefits are often short term, and it sometimes creates an offsetting reaction in the opposite direction. Hindsight is 20/20, but we’d probably be in better shape today had we done a better job overseeing Wall St. over the past 10 years, rather than attempting to create a momentary urgency around homeownership after the fall.
Thank goodness we have the Help-U-Sell Homebuyer Stimulus Program to coax some of those procrastinating potential buyers back into the market. Truth is: there’s probably NOT going to be another Tax Credit for home buyers. But, when you combine remarkably low interest rates with amazingly low prices — and then toss in the Homebuyer Stimulus Program — this is one of the best times in the history of the world to buy a home.