Unlock America's Economy: $7500 First-Time Homebuyers Tax Credit NAR Survey Results - January 2009
During the week of January 5, the National Association of REALTORS® surveyed a sample of its members asking them to assess the usefulness of the first-time homebuyer tax credit as an incentive.
Findings:
More than two-thirds of the prospective homebuyers that worked with REALTORS® were buying their first home. Very few actually made a purchase.
Potential first-time homebuyers are actively shopping for homes, but few are actually purchasing. A quarter (27%) of the REALTORS® who responded had not completed any single sale to one of those potential first-time homebuyers. Another quarter (26%) of the REALTORS® reported that they had closed one transaction with a first-time homebuyer.
When asked to identify the obstacles to the effectiveness of the First-time Homebuyer Tax Credit, the repayment feature of the credit was by far the most objectionable feature. Responses were as follows (respondents could check all that apply):
- The credit must the repaid (71%)
- Consumers view the repayment of the credit as adding to their debt load (60%)
- Applies only to first-time homebuyers (43%)
- Credit is not available as cash at settlement (42%)
- Income limits (23%)
- Tax credit is not large enough (15%)
Other Comments:
No other tax credit that applies to individuals has a repayment feature.
The only reason for the repayment feature was that the bill in which it passed was a “paid for” bill. The repayment feature provided an offset. It had no policy foundation.
NAR’s maintains an Index of Pending Home Sales, a month-over-month survey that identifies transactions where a contract has been accepted but the transaction has not gone to settlement. The most recent survey, for November 2008, shows the largest decline in pending home sales since the 2001 inception of the index. This suggests that the marketplace has not yet responded to this tax incentive.
Presently, the inventory of houses available for purchase is more than three times its usual levels.
Unlock America's Economy homepage>
