If first-time buyers are getting thousands of dollars in tax credits from the federal government to stimulate the economy, why shouldn't all home buyers get equal treatment? And what about refinancers? Couldn't they make good use of a tax credit to help defray closing costs and loan fees?
Whatever your thoughts on these questions, there is an effort getting underway in Congress to extend tax credits to anyone who buys a new or existing home in the coming year, with no income limitations. In one case, legislation would even create a new "temporary" $3,000 tax credit to help defray the costs of refinancing mortgages on principal residences.
Two Dallas-area members of Congress, a Democrat and a Republican, have introduced bills that not only would broaden the reach of the current housing tax credits to almost everybody, but would also keep the program going until either mid-2010 or the end of that year. The current credit expires Nov. 30.
Rep. Kenny Marchant, a Republican who represents suburbs between Fort Worth and Dallas, is pushing a bill that would expand the current $8,000 federal credit to buyers of all houses, not just first-timers, through June 2010. The bill (H.R. 2619) would also create an unprecedented $3,000 credit to help offset "qualified refinancing costs" -- closing fees, lender charges and the like -- through next June.
In a statement, Marchant said his goals are to boost sales, reduce inventory and stabilize prices. The refinancing credit, he said, is designed to encourage owners "to take advantage of current low mortgage rates" and cut their monthly payments to stay out of financial trouble. The $3,000 refi credit could be used to pay for loan "points" or other transaction fees or to "put equity in their home if they're a little underwater."
Marchant's colleague Rep. Eddie Bernice Johnson, a Democrat who represents downtown Dallas, has introduced the Home Buying Credit Expansion Act (H.R. 2606), which would extend the current credit through Dec. 31, 2010. The bill would also open the credit to all buyers of principal residences but would not provide any new tax incentives to stimulate refinancings.
The near-simultaneous introduction of tax-credit-expansion bills appeared to put the two most potent housing lobbies -- the National Association of Realtors and the National Association of Home Builders -- into a political quandary. On the one hand, any broadening of tax incentives for home buying would be good news for their builder and realty broker members.
On the other hand, any public perception that the expiration date for the current credit might be extended could cause some potential buyers to delay purchases. And if all would-be buyers might be eligible for some future federal tax credit -- not just first-timers -- large numbers of consumers might just stay on the sidelines, waiting for that better deal to come out of Congress.
The National Association of Home Builders "does not want anything that would stop the traction the current credit is now getting," a spokesman said. "We think it would be more appropriate to address [an extension or other changes] closer to the credit deadline" in the months ahead.
But Mary Trupo, public policy director for the National Association of Realtors, said her 1.1-million-member group sees it differently.
On the other hand, any public perception that the expiration date for the current credit might be extended could cause some potential buyers to delay purchases. And if all would-be buyers might be eligible for some future federal tax credit -- not just first-timers -- large numbers of consumers might just stay on the sidelines, waiting for that better deal to come out of Congress.
The National Association of Home Builders "does not want anything that would stop the traction the current credit is now getting," a spokesman said. "We think it would be more appropriate to address [an extension or other changes] closer to the credit deadline" in the months ahead.
But Mary Trupo, public policy director for the National Association of Realtors, said her 1.1-million-member group sees it differently.
"We say: If it is working for first-time home buyers, then why not for all buyers, with no income limitations? We would like to see the expiration date extended. Expanding the credit is really the way to stabilize the market -- by making it available to everybody."
Trupo said that first-time buyers accounted for one-half of all purchasers in March -- up from one-third in January -- and that increase is directly attributable to the tax credit.
The association has no hard estimate of what effect expanding the credit to all buyers would have on total sales. But Jed Smith, managing director for quantitative research, said earlier projections about the first-time-buyer credit ranged into the hundreds of thousands of additional sales. Broadening the credit to all buyers would almost certainly push the total higher.
Where is this all headed? Don't look for any immediate action on Capitol Hill. The legislative calendar is jammed already, the budget deficit is at all-time levels, the summer recess looms, and neither of the tax credit bill sponsors sits on the Ways and Means Committee, which must originate all tax legislation.
The association has no hard estimate of what effect expanding the credit to all buyers would have on total sales. But Jed Smith, managing director for quantitative research, said earlier projections about the first-time-buyer credit ranged into the hundreds of thousands of additional sales. Broadening the credit to all buyers would almost certainly push the total higher.
Where is this all headed? Don't look for any immediate action on Capitol Hill. The legislative calendar is jammed already, the budget deficit is at all-time levels, the summer recess looms, and neither of the tax credit bill sponsors sits on the Ways and Means Committee, which must originate all tax legislation.
But later this year, you can bank on it: There will be a significant push to extend the housing tax credit -- and maybe even open it up to everybody.
