Money

$15,000 Home Buyer Tax Credit Gets Another Boost

By Ilyce Glink

Updated on: August 24, 2009 / 12:20 PM EDT / MoneyWatch

It isn't just the National Association of Realtors, Mortgage Bankers Association of America, the National Association of Home Builders and Sen. Johnny Isakson (R-GA) who want a $15,000 home buyer tax credit.

According to Bruce Hahn, president of the American Homeowners Grassroots Alliance, 70 million homeowners want it as well.

With prime mortgage foreclosures and delinquencies now approaching 20 percent, Hahn believes the time is right to not only extend the $8,000 first-time home buyer tax credit - but expand it to $15,000 and make it available to all home buyers, even millionaires.

In a press release this morning, the American Homeowners Grassroots Alliance said:

Foreclosures on prime mortgages (the vast majority of all mortgages) are increasing very rapidly as the nearly 10 percent unemployment and underemployment is leaving more homeowners with good credit histories unable to keep up with their mortgages. At the beginning of 2007 only about 2 percent of fixed rate or adjustable prime mortgages were in foreclosure or more than 90 days delinquent. At the end of the second quarter of this year, that number was closing in on 20 percent. While the total number of remaining subprime mortgages has declined, the share that were in foreclosure or more than 90 days delinquent has grown from 8 percent to 27 percent over the same period.

Hahn sent letters this morning to Senators Max Baucus (D-MT) and Charles Grassley (R-Iowa), and Representatives Charles Rangel (D-NY) and Dave Camp (R-MI), urging the leaders of the Senate Finance Committee and House Ways & Means Committee to make "the passage of this legislation their highest priority" in this Congressional session.

"Because of the impending serious threat of the new prime mortgage crisis, we can't afford to wait until it deals another serious blow to the economy while we are still in the middle of a deep recessaion," wrote Hahn.

The House (H.R. 1245) and Senate (S.1230) each have bills that would:

Increase the first-time home buyer tax credit from $8,000 to $15,000;
Expand the tax credit's eligibility to apply to any buyer;
Eliminate the $75,000/$150,000 income cap;
Extend the tax credit for one year from the date of enactment.

It's clear that the real estate industry is panicked. The 7.2 percent uptick in existing home sales is nearly entirely due to sales from the first-time home buyer tax credit and real estate investors who are bottom-feeding off of foreclosures. While several Realtors in Phoenix, Las Vegas, and South Florida have let me know that they're having great years, the truth is that hundreds of thousands of Realtors have left the business, shrinking membership in the National Association of Realtors by a double-digit rate.

If you do a deep dive into the existing home sale numbers, it's also apparent that even with home prices falling dramatically, higher-priced homes aren't selling well - if at all. Some of the successful home sellers aren't trading up - they're either trading even or buying down or just renting. Hardly the fodder of a successful real estate market.

Real estate has brought this country (and the world) out of our last several recessions. What will our economy look like without it?

The real estate lobbying industry doesn't want to find out.

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