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W&C Blog  
Sean D. Smith: The Final Coat
by Sean D. Smith
October 14, 2009

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Owed to a busy workload that didn’t afford a day off for over six weeks, I submitted this blog well past my intended deadline. And, ostensibly, this crush of homebuilding (and our adroit drywalling) activity in our work area of southern Pennsylvania was owed to the looming end of the Federal Government’s tax credit for first time homebuyers. This generous tax credit was part of the budget busting $787 billion stimulus bill passed by Congress and signed by the President in February, and provides an $8,000.00 incentive for newbie homebuyers to make an important investment during turbulent times.

How important? Consider this: According to the National Association of Homebuilders, “approximately 200,000 additional home sales are attributable to the tax credit and that it has resulted in a net increase of 187,000 jobs,” a salient flow contrasted against the seeming daily ebb of jobs that pushes the national unemployment figure closer to 10 percent.

A healthy (not hyper-charged) homebuilding environment is elemental to adding vigor to the unresponsive economy and the Federal government’s intervention, through the homebuyer tax credit, is essential to encouraging wary, credit worthy individuals to disregard doomsayers and purchase a home.

As an avowed conservative, I cringe to acknowledge the necessity of a government subsidy to help stabilize and grow the housing market, especially since the government was partially culpable in creating the historic housing market horrors.

Yet, apparently, my newfound hypocrisy is genuine, as I cheer an article in the Wall Street Journal that details House and Senate Democratic efforts to extend the beneficial tax credit for first-time homebuyers. And for good reasons, as NAHB estimates that “extending the credit through November 30, 2010 and making it available to all purchasers of a principle residence would result in an additional 383,000 home sales and generate 347,000 new jobs in the coming year.”

While I realize there is no such thing as a free lunch, when it comes to this allocation and payment of government funds, as part owner of a family-owned drywall company, I know this as well: After experiencing one of the worst years in Taneytown Drywall’s 25 year history, it’s preferable, aided by the homebuyer tax credit, to now be able to afford to buy not only lunch, but breakfast and dinner, as well …


Sean D. Smith

  Comments (2)Post a Comment
Title: Tax credit


I’m not sure I’m convinced this Gov program is a good idea in the long run.
Can you provide a link to the WSJ piece?
And why would a new homebuyer buy a newly constructed home when they could buy a foreclosed home at bargain prices?



Title: Re:tax credit


Steve, thanks for opining. The WSJ article,in the Thursday, Oct.8 edition,appeared in section A, page four. I've since read about both Dems and Repubs grumbling about the cost of extending the program which undermines the likelihood of it passing. A shame though, as the NAHB numbers provide merit for its continuance.
As for your question about new homebuyer preferences; In our work area (southern PA), foreclosures aren't nearly as prevalent as other parts of the country (think S.W Fla). This certainly ameliorates new home construction from such destructive competion. As for other,foreclosure abundant areas;perhaps newbie homebuyers feel "safer" committing resources to a well warrantied and (perceived) well constructed home (although I'm merely guessing).
Anecdotally, our business is benefitting from the homebuying spurred on by the homebuyer tax credit. I think this monetary mechanism,although temporary (the proposed extension would be for a year), is an acceptable tool to invigorate a salient part of our economy.


 

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