Congress Debates Extension to Benefit Building Home Industry

Two proposals is currently being debated in the Congress involving the extension of the federal program that gives first time homebuyers $8,000 in tax credit. The said bills are being supported by the building home industry to pave the way for a long term recovery.

Many housing analysts are not sure if the extension is the answer to the housing problem. For one, the millions of foreclosed properties in the market have already dragged home prices down to record levels. And the bottom is nowhere in sight if you consider the Mortgage Bankers Association’s forecast that the foreclosure rate can be expected to climb until late 2010.

On the other hand, the federal tax credit program was actually part of the stimulus packaged which was approved at the beginning of the present year. Most of the $787 billion budget was geared to prop up the messed up housing and mortgage industries. Only those who will be buying a home for the first time and with an income of $75,000 (individual) and $150,000 (couples) are eligible.

If the extension is not approved, some economists believe that home sales will drop since the industry is still a long way from being self-sustaining. In addition, it might increase the risk for double-dip economic recession.

As the December 1 expiration nears, the building home industry has been quite vocal with its desire for the Congress to not only extend the tax credit incentive but to also expand it. Obviously, these home builders consider the program to be good for business.

Other economists consider the extension and expansion not a really good idea for the economy. They argue that, in the first place, these homebuyers will still purchase a property with or without the tax credit. Some even consider the approval similar to the program, Cash for Clunkers, which was launched to provide assistance to the car industry.

Whether or not the extension will be good for the building home industry and the national economy will be up to Congress. Basically, they have to consider the limitations of the government when it comes to using taxpayer’s money to revive an industry that has been hit hard by the mortgage mess.

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