Stand up for nonprofit news & help us reach our $100,000 goal! GIVE NOW

Let the home buyers’ tax credit expire

Marketplace Staff Oct 22, 2009
HTML EMBED:
COPY

Let the home buyers’ tax credit expire

Marketplace Staff Oct 22, 2009
HTML EMBED:
COPY

TEXT OF INTERVIEW

Bill Radke: The Obama administration is debating whether to extend a popular tax credit for first-time home buyers. This is the $8,000 tax credit, and it’s set to expire at the end of November. Marketplace’s economics correspondent Chris Farrell says — don’t extend it, let it expire. Good morning, Chris.

Chris Farrell: Good morning.

Radke: If an $8,000 tax credit helps people get into a house in these tough times, and it helps our sickly housing market, why not extend it?

Farrell: Because we don’t need it any longer. Look, the $8,000 tax credit did help stabilize the market. There’s no question about that. But I think if you look into the data — the housing market is stabilizing. And I have to tell you, Bill, one of the reasons we got into the trouble we’re in? Is that the government gave so much support to the housing market.

Radke: Well the theory, of course, is that when people own homes that now they’re stakeholders, and they’re more responsible, better neighbors, and over time they’ve built wealth because of it.

Farrell: Right. And then they also contributed to what — $7-8 trillion real-estate bubble, which we’re still dealing with the after-effects of that. Plus we do have to remember, people want to be buying homes. This is what I really think is going to happen over the next coming years: The real-estate market is going to become the most boring market imaginable.

Radke: Why boring?

Farrell: Prices aren’t going to go up much. They’re aren’t going to go down much. No one’s going to get excited about real estate, and I think that’s a good thing. Look, the injection worked. Let’s not continue it.

Radke: The market may be stabilizing, but we keep getting told — we keep reporting on this program — foreclosures are still very high, and there’s a lot more to come. Are you sure this is not still too tender an area of our economy?

Farrell: Oh I think it’s a very tender area of our economy. I have no question about that. But does it need a continued injection of subsidy by the government? Mortgages rates are what — down about 5 percent. Prices have come down a lot. We are seeing some stirring of buyers. And quite frankly, I just don’t think that it needs the stimulus of $8,000. Now, I know. I know the real-estate industry, they’re saying, “This is the end of the world.” It’s not and we should stop subsidizing this industry. There is nothing wrong — this is a radical statement I know — but there is nothing wrong with renting.

Radke: OK. Marketplace’s economic correspondent Chris Farrell. Great to talk with you.

Farrell: Thanks a lot.

As a nonprofit news organization, our future depends on listeners like you who believe in the power of public service journalism.

Your investment in Marketplace helps us remain paywall-free and ensures everyone has access to trustworthy, unbiased news and information, regardless of their ability to pay.

Donate today — in any amount — to become a Marketplace Investor. Now more than ever, your commitment makes a difference.