According to the most recent numbers, since it was first introduced in 2008, the homebuyer tax credit helped 3.3 million homeowners and cost the country $23.5 billion.
After President Obama extended the closing deadline to the second portion of the homebuyer tax credit back on July 2, 2010, most of us thought that was it for the credit. However, the homebuyer tax credit has been back in the news ever since HUD Secretary Shaun Donovan failed to give a reporter a straight answer when asked whether the administration was considering a third tax credit.
Record-low home sales have also ginned up discussions about the need for another homebuyer tax credit. While existing-home sales did see an increase of 7.6 percent in August, it was the second-lowest reading in the series (1999).
Maybe we need another tax credit
So while even those who championed the hardest for these homebuying incentives to begin with no longer think they have a place in the market, we wonder the opposite -- maybe we need another tax credit.
Given the fact that the credits have disturbed the market to such a great degree, and twice nonetheless, would a third credit produce better results than the first two? If we hadn't already distorted the natural function of the market so greatly (and twice), the answer would probably be no. While there is little doubt that there have been some benefits, the resounding criticism is that the tax credits probably only incentivized borrowers who would have bought anyway, tax credit or not. Still, having gone to this well twice already, and with the market still in such difficult shape, the answer is probably a reluctant "yes".
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