Housing Head Honcho Gives Negative Signal on Tax Credit Extension

• October 21st 2009

by Will Smith

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Deliberations on Capitol Hill are heating up about whether to extend the $8,000 first-time home buyer tax credit. The federal incentive, which expires on November 30th, has been credited by the real estate industry and others with providing a much-needed boost to home buying. Others argue that there is an associated cost that might outweigh the benefits. Department of Housing and Urban Development Shaun Donovan voiced this view yesterday, according to an article by The Wall Street Journal:

“[Donovan] said that the ‘real issue’ in considering an extension was whether an extension was worth the cost to the government in lost tax revenue.

The actual cost of the credit won’t be known ‘until Americans have filed their tax returns,’ he said. ‘And so, we feel it’s very important within the administration that we gather as much data as we possible can in advance of that before we make a final decision.’”

Given that Donovan is the national head honcho for the housing market, his words carry real weight. He also expressed doubt as to the level of economic damage if the credit is not extended. Proponents of the extension argue that the tenuous momentum witnessed in the housing market in recent months will collapse if the credit does not continue. Those proponents include large lobbies like the National Association of Realtors and National Association of Home Builders.

The final decision on whether or not to extend the credit should be made within the next few weeks, says CNBC.

This article originally published at http://dc.urbanturf.production.logicbrush.com/articles/blog/housing_head_honcho_gives_negative_signal_on_tax_credit_extension/1431.