Effect of Tax Credit for First-Time Home Buyers
Thursday, February 26th, 2009This APM Marketplace article made me wonder…
Why does the person they interviewed not see the tax credit as money in his pocket? It’s because he doesn’t receive it until he pays taxes. And between now and then, he doesn’t have sufficient cash for the required up-front down payment. Did he think about adjusting his withholdings to compensate for the subsequent tax credit? But then, a person who must make such adjustments to afford a home probably shouldn’t be buying one anyway…
What effect will this have on demographics? Will it create an artificial bubble of 2009 home purchases? Will there be a surge toward lower-priced homes, further depressing the value of more lavish ones?