The Odds of the $8,000 Tax Credit Jumping to $15,000

This is pretty good news. The Republican senator from Georgia, Johnny Isakson, has introduced legislation that would increase the amount of the present tax stimulus from $8,000 to $15,000. It would also remove the financial caps that are now in place, making it open for more than just first time homeowners.

Sometimes it’s nice having someone working on bills in Congress who did that as a profession in the real world, as Isakson has a background in real estate. His participation was big in getting the initial $8,000 tax credit passed to begin with, and he believes it’s been successful so far. But he also believes that it’s insufficient because, in his own words, “We don’t have a recession in first-time home buyers, we have a recession in the move-up market.” The hope is to take advantage of the reality that there are plenty of very nice homes that have been foreclosed upon, and that a present home owner might like to have the chance on improving their lot a bit with something fancier and larger.

Georgia is one of a number of states that’s been hit hard by the housing and banking crisis, especially in the Atlanta area, and having a more broad scope than what’s presently available would certainly help his state, as well as states like Florida, California and Nevada. His bill is getting a lot of support from both realtors and national associations, including the National Association of Realtors and the National Association of Home Builders.

Where the battle will come is in Congress, where members of his own party already don’t support many of the tenets of the president’s stimulus package, believing they’re too costly. Isakson estimates that his proposal would cost the government another $32 billion, which is a pretty high figure that might not be palatable for anyone to swallow.

At the same time, if it achieved its intended result, that being new home owners snapping up on some great deals, especially if they purchased more expensive homes than they already had, the costs could be mitigated and even become beneficial for the government on the back end. In states hit hard by this economic disaster, million dollar houses are now going for around $350,000 to $500,000, depending on location, and if someone who had been paying on a $250,000 home decided to take a chance and upgrade to a home worth $400,000, everyone ends up on the winning side.

Why might someone decide on moving up to a house that costs more? Families get bigger; people realize that they bought too small a house the first time around; wage earners are making more money than they were when they bought their first home; and some see the possibility of shooting for a dream house that’s suddenly more affordable in the past as a viable option.

One thing that could help push the tax credit through is the suddenly rising mortgage rates. If either they continue rising, or there’s another sudden downturn in the housing industry, they could decide that adding this little bit of a discount might be the best way to go to try to stimulate the market again.

I applaud Senator Isakson for taking such a bold stand in trying to push this legislation through. One can only hope he’s as successful as he was with the still present $8,000 tax credit.

Luis Pezzini
lpezzini@SunsetStripRealty.com
http://www.SunsetStripRealty.com
First time Home Buyer