TEXT OF STORY
KAI RYSSDAL: So let’s see. Home prices are lower than they’ve been in years. A 30-year-fixed rate mortgage can be had for 5 percent. And if you’re new to the wonderful world of real estate, the government will let you take $8,000 off your taxes this year. So perhaps the figure that came in from the National Association of Realtors this morning shouldn’t have been the surprise it was. That sales of existing homes jumped 9.4 percent last month.
Not much doubt about the numbers. But there is plenty of disagreement over whether that first-time home buyer tax credit is responsible. It’s set to expire on November 30th. And politicians eager for an economic turnaround are asking this question: Should the credit be extended?
Marketplace’s Nancy Marshall Genzer reports.
Nancy Marshall Genzer: Talk to the National Association of Realtors, and they’ll tell you housing sales would have been down this year without the first-time home buyer tax credit.
Walter Molony is the group’s spokesman.
Walter Molony: With the credit this year, we are projecting existing home sales will rise 1.5 percent. Not a big gain, but without the tax credit, sales would drop about 6 percent.
Congress is now deciding whether to extend the tax credit for another four to six months. Not surprisingly, the National Association of Realtors is lobbying for a yes vote.
Zach Pandl wants Congress to vote no. He’s an economist at Nomura Securities. He says our money is better spent through efforts by the Federal Reserve to keep interest rates low — that helps all home buyers.
Zach Pandl: For the first-time home buyers tax credit, you have to wonder whether that’s the best bang for the buck. There are other things that are supporting home demand, like low prices and low mortgage rates.
And Pandl says first-time home buyers only accounted for about 31 percent of home sales last month. The realtors says it was more like 41 percent.
Guy Cecala is publisher of Inside Mortgage Finance. He says, regardless of how you measure first-time buyers, it’s important to get them into the market. And the tax credit does that.
Guy Cecala: If I wanted to buy a house, it was just a question of when, this is pushing me to do it.
Cecala says bargain basement prices for a new basement will eventually be enough to boost sales. He says extend the tax credit once. But if the realtors lobby for more extensions next year, Congress should just say no.
In Washington, I’m Nancy Marshall Genzer for Marketplace.