Shack's Corner

According to an article in the Wall Street Journal, the Government Accountability Office reports the cost to taxpayers of the home buyer tax credits which were in effect from April 2008 through June 30, 2010 was $22 Billion. There are many questions regarding the credits. Was it worth the cost to the taxpayer? What did it accomplish? Did the tax credit attract those who otherwise would not have purchased a home to buy one or did it just encourage those who were planning to buy a home to move their plans up? Did it help to stop falling real estate values or just temporarily delay the inevitable?

Based on the limited data we have since the expiration of the tax credits and the significant slowdown in pending sales as illustrated by the chart below, I’m of the opinion that the credits simply encouraged those who were planning to buy to move up their purchase and served to artificially inflate values for the period of time they were in effect. As soon as the credits expired, demand dropped and once again we have pressure on prices. Of course, that’s just one opinion. Many are calling for another round of tax credits, some calling for credits significantly higher than what we’ve seen to this point. Since we have a diverse group of real estate professionals who occasionally read this blog, I’m interested to hear your comments on this topic. Do you feel the tax credits were a success and are you in favor of another round of credits?