By Chris Buchheit on March 29, 2010
Cash For House Clunkers?
Several lawmakers in Washington are considering extending the First-Time Home Buyers Credit beyond the fall.
Originally, the bill gave first time home buyers an up to $8,000 credit to assist them in the purchase of their house in an effort to help bring back the housing market. In order to keep alleged increased sales in homes, Congress is considering extending this credit until the end of the year. Congress fears that a lag in the housing market will only make the economy worse.
Therefore, there are currently many bills out in the House that propose this extension. Some bills also propose increasing the credit maximum to $15,000. This credit will pay only for ten percent of the house’s value, and the maximum is only the price ceiling that the government is willing to lend to consumers. Many in Congress are behind these types of bills, and support is apparently increasing.
However, there are criteria for being eligible for the credit. Couple buyers must earn less than $150,000 dollars, and single buyers must earn less than $75,000 to be considered for this break. Also, the buyers must not have owned a home for at least three years prior to buying this house.
All this speculation sounds great, but there are also many people not sold on this idea. Some critics believe that this program is in the same vein as Cash For Clunkers, the infamous program proposed by Congress earlier this year. Critics make the point that this kind of government stimulation of the economy artificially stimulates demand, which, no matter when the program runs out of steam, will ultimately reflect badly on the housing market. Since more people will have bought houses because of this credit increase, less people will buy houses under market prices when the program runs out. This effect in itself might prove fatal to the housing market in the long-term.
Still, there is no doubt that increased credit alleviations have led to increased house purchases, and it appears that the credit extension will be passed by Congress in the very near future.
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