Wednesday, February 4, 2009

Home Purchase Tax Credit Moving to $15,000? Senate Approves Bill

Ann Arbor and Ypsilanti area home buyers may get windfall tax credit - With the flood gates now open, the senate piles on more tax credits - first with a tax credit of sales tax and loan interest on cars purchased this year (added to the senate bill on Tuesday) and then with approval of a tax credit of up to $15,000 to home buyers - not just first time buyers (added Wednesday).

Johnny Isakson, Republican of Georgia, a former real estate broker who was the prime sponsor of the homebuyer credit, said it was modeled after a similar, $2,000 homebuyer credit that helped lead the country out of recession in 1975. “We do have a history in this country with housing and it goes back to the crash of 1974, which actually in terms of inventory and price declines was comparable to what’s happening now,” Mr. Isakson said at a news conference. “Within one year of the inception of that tax credit, two-thirds of the available inventory that was on the market was gone. The market moved back to a balanced inventory, values stabilized and things became very healthy. The only reason I know all of that is I was selling houses in 1974, that’s what I was doing to feed my family and make a living.” New York Times Story
Will a tax credit of $15,000 be enough to increase the demand and prop up home prices for Ann Arbor-Ypsilanti real estate ? With many homes already"half off" and now the government considering adding the equivalent of a 15 percent rebate - I am pretty confident that many people with the means to buy - people with relatively good job security such as teachers, nurses, University of Michigan, St Joseph Mercy and U of M Hospital employees will see a great opportunity. Especially in areas such as Ypsilanti and Superior Townships where newer homes have seen severe value drops - but offer exceptional utility.

A young family that previously would have to pay @ $250,000 for a 4 bedroom 2 story home with 2000 square feet can now buy similar Ypsilanti and Superior Twp real estate starting in the $120,000. Inparticular - the subdivsions of Bromley Park, Brookside and Greene Farms

While in the long run, I don't feel the government can bouy up housing prices with tax credits, it could be the spark needed to get buyer confidence up enough to move the hosing market in southeast Michigan from a strong buyer's market into neutral territory.

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