New Tax Credit Disappoints Home Building Industry
As part of the new administration’s rescue plan for the ailing US economy, a new housing tax credit of $8,000 will be given to first-time buyers. However, the release of this news disappointed home builders, saying that this is not enough to help the housing industry.
The past year was a very difficult time for the US and the whole world as well. The economic recession is the worst that the US has experienced. This has caused massive unemployment as large companies declared bankruptcy. This is a trend that continues up till today, so the new government under the leadership of President Barack Obama is taking necessary actions to reverse this trend.
In particular, the housing industry suffered greatly, and is even contributing to the worsening economic crisis. Thus, a significant part of the government’s bailout plan is dedicated to extend help and support to home buyers and homeowners as well.
The new housing credit was actually scaled down, from an original amount of $15,000 for home buyers. This is also limited to first-time buyers who will start construction within the start of the year to November.
Not only are the home builders disappointed. Most buyers who were expecting the $15,000 are now reconsidering if they will continue with their plans of home building, after the new tax credit was released. According to Beazer Homes USA Inc., a lot of people got interested in new home construction after learning of the tax credit. This can also put home builders in jeopardy, as less people are likely to start home construction.
On the other hand, this may have a good effect on the real estate industry. According to Paula Swayne, a Sacramento, California real estate broker, they are expecting an increase in home sales because of the low tax credit for home building. Moreover, since there are a lot of foreclosed properties in that area, the value of homes are very affordable. The National Association of Realtors are even expecting 200,000 property sales, as an effect of the new tax credit.
