There’s been a lot of buzz about a new homebuyer tax credit ever since HUD Secretary Shaun Donovan did all but rule it out on CNN’s “State of the Union” television program a week or so ago.
While he noted that it was “too early to say after one month of numbers whether the tax credit will be revived or not,” that was enough for the media and the general public to begin speculating.
Adding fuel to the fire was WL Ross & Co. CEO Wilbur Ross, who argued today that the homebuyer tax credit should be re-instituted to lift up the sagging housing market.
The billionaire investor, who began picking up loan servicing companies on the cheap after the mortgage crisis got underway, said such a credit would revive buying interest and reduce growing inventory.
While speaking at the KBW Insurance Conference in New York City today, he proposed a 5% of the purchase price homebuyer tax credit to get prospective buyers interested again.
Sales Increased, but Homebuyer Tax Credit Had $22 Billion Price Tag
Home sales saw a boost after the first homebuyer tax credit was announced, but home purchase applications quickly dropped off after its expiration back at the end of April.
The latest homebuyer tax credit offered up to $8,000 for first-time homebuyers and $6,500 for so-called move-up buyers.
While the tax credit was deemed somewhat successful, the hefty cost has made it a less attractive option to turn to in the future.
In fact, the homebuyer tax credits came with a price tag of about $22 billion – and many have argued that they simply pushed would-be buyers into the fold a little earlier.
$25,000 Homebuyer Tax Credit
That said, the chief economist of the National Association of Home Builders told the NY Times a $25,000 homebuyer tax credit would really get “people off the bench,” but the chances of such a measure making its way through Congress was nonexistent.
In other words, don’t hold your breath.