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$8000 Tax Credit Survey
Survey: Extend tax credit and add 334,000 homebuyers
SEATTLE – Sept. 24, 2009 – Nearly one in five (18 percent) of prospective first-time homebuyers said extending the $8,000 tax credit would be the primary influence on their decision to buy a home before the end of 2010, according to a Zillow survey. That would equate to 334,000 buyers from Dec. 1, 2009 to Nov. 30, 2010 – a likely time period for an extension, according to additional analysis.
In the survey, adults who qualified as first-time homebuyers were asked if an extension of the tax credit would influence their plans to buy a home before the end of 2010. And assuming the credit was extended, those who intended to buy a home said it would be the “primary influence” in their decision; 25 percent said it would be a “significant influence”; and 27 percent said the credit would have “some” influence on any homebuying decision. Thirty-one percent said it would have no influence on their decision.
In the report, Zillow says that an extension of the tax credit program would result in 1.86 million first-time homebuyers purchasing homes between Dec. 1, 2009 and Nov. 30, 2010. If each of those buyers qualified for the full $8,000 tax credit, the program would cost up to $14.86 billion.
“Although nearly two million first-time homebuyers may receive the tax credit if it is extended for another year, the incremental impact of the credit is far smaller,” says Zillow Chief Economist Stan Humphries. “These numbers suggest that extending the credit might bring an additional 334,000 homebuyers who would not otherwise purchase a home into the market. While 334,000 may seem like a small number relative to the total number of homebuyers who would claim the credit, their addition to the market next year could make the difference between a robust annual increase in home sales next year and a flat or negative change in home sales relative to this year.”
Humphries says a tax credit extension will “boost demand at the margin,” and that will help work down the current inventory of for-sale homes. Still, “For every five homebuyers who receive the credit, four would have bought their home even without the credit.”
© 2009 Florida Realtors®