The NAR has evaluated all of the options for a home buyer tax credit and the wide range of implications and benefits involved. For example, if all home buyers were entitled to a full tax credit, an additional 2.22 million potential home buyers would meet the income requirements for the purchase of their own home. However, only 25% of those newly eligible would actually buy a home.
Currently, the $7,500 tax credit for first-time home buyers must be repaid over a 15-year period. Only 264,000 households meet those requirements. If those 264,000 eligible buyers held their home for at least 10 years, it would only result in an additional 66,000 home sales.
The chief economist of the NAR, Lawrence Yun, stated that the NAR supports a tax credit for any home purchase that meets underwriting standards. Yun believes that an incentive for home buyers is critical at this point in time to help reduce current inventory and to help stabilize housing prices. He continues by stating that the cost of this credit would be far less on the U.S. Treasury than that of a prolonged recession.
If only first-time buyers were made eligible and the repayment feature is removed, the result could be as many as 202,000 additional home sales. If the benefit were to be offered to all home buyers with the repayment feature intact, the increase in home sales would be 181,000.
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