Posted By: Admin
Author: Michael Corkery
Wednesday, June 11, 2008 12:00 AM Real Estate
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It comes as no surprise that luxury home builder Robert Toll would push for a proposal in Congress that would provide home buyers a tax incentive to buy a home.

The tax incentive “will bring buyers off the sidelines and into the market, and thereby stop the downward spiral of home prices,’’ Mr. Toll said in a statement accompanying Toll Brothers earnings release this morning. A few weeks ago, Mr. Toll likened the role of a home buyer tax incentive to that of donning an oxygen mask in a malfunctioning airplane

“I know we should help the less fortunate facing foreclosure but if we don’t solve the problem of falling home prices first, dealing with the foreclosure problem will be like trying to catch a falling knife. As they say in airplanes, put your mask on first and then help others,’’ he said.

There are a couple of tax incentive proposals floating through Congress, including a $7,500 tax credit for first time home buyers who buy a home.

Economists at the builder’s trade group, the National Association of Home Builders, say that when Congress implemented a $2,000 tax credit in 1975 it helped turn around the housing slump by clearing out the glut of new, unsold homes. More than 500,000 people used the tax credit, says Robert Dietz, an economist at the NAHB. (Mr. Dietz says that the 1975 credit would be worth about $10,000 in today’s market.)

The difference between 1975 and now is that home prices have fallen much more steeply in the current housing slump, which is making some buyers nervous about buying a house for fear that it could lose even more value. Mr. Dietz says if the tax credit spurs a wave of first-time buyers to jump into the market it could alleviate others buyers’ fears about being “the first person in.”

Any first-time home buyers out there? Would $7,500 inspire you to buy a house in today’s market?

Source: http://blogs.wsj.com/developments/2008/06/03/will-home-buyer-tax-incentive-fix-the-housing-market/