Our own Forrest Barbee was asked by the Las Vegas Review Journal newspaper recently about the impact of the federal tax credit (for first time homebuyers) on residential sales in Nevada. The statistics were even more dramatic than I expected…
The evidence comes from the Internal Revenue Service, which says that 20,222 Nevada first-time homebuyers have applied for the tax credit of up to $8,000 for the tax year 2008 as of Sept. 18.
“That’s a third of all the sales, new and resale, for that one-year period. That’s a pretty sizable number,” said Forrest Barbee, corporate broker at Prudential Americana Realty and a director of the Greater Las Vegas Association of Realtors.
“It certainly suggests to me that an awful lot of people are taking advantage of this tax credit,” Barbee said.
As you might imagine, the big question on everyone’s mind going forward is the potential extension of this highly effective housing stimulus program. The current tax credit is set to expire on November 30th and lawmakers are hard at work developing phase II of this highly popular tax break. In the meantime, buyers are struggling with the worst enemy of any market-based decision making process, uncertainty.
In truth, almost no one doubts that the tax credit will be extended in one format or another. Residential housing is at the epicenter of our current economic downturn and no expert that I know of thinks a sustainable recovery is possible without meaningful stabilization in US house prices. You can’t achieve stabilization without a steady supply of buyers, and without the tax credit it would appear that you forfeit quite a bit of residential enthusiasm. Is that something the US economy can afford right about now ??
Almost certainly not…
