The $8,000 tax credit stimulus for first-time home buyers that was passed by Congress last year was aimed to help the failing housing market and to re-energize it and without doubt the tactic worked. However, now that the credit is about to expire at the end of November there is some concern that once this program stops what will happen to the housing market? Will it be able to proceed in the positive manner like it's been doing all summer?
So far this program has cost the government close to $15 billion, which is more than twice what Congress had projected when it passed the bill this past February.
Analysts have indicated that the credit is accountable for several hundred thousand home sales throughout the nation.
There are some people who feel that unless the program is allowed to end in late November on schedule, the tax-credit may become just another expensive government program that will have no end.
The National Association of Realtors is trying to urge Congress to extend the credit until at least September of next year and to further expand the credit to $15,000 and to have it available to all buyers, new or not. If passed the program would then cost between $50 billion to $100 billion more.
As the deadline for the program nears there has been a spike in mortgage applications which increased close to 10 percent for the week ending September 3rd from the last week in August which is the largest increase since last spring.
The N.A.R. has estimated that approximately 350,000 home sales this year were a direct result to the tax credit and that those sales would not have happened if it were not for the stimulus plan.
Johnny Isakson, (R) from Georgia, the sponsor of the original Senate bill, is now working on a new bill that would give a maximum $15,000 credit to "any" buyer as long as they have been in a home for at least two years.
The real estate industry is heavily lobbying for this new bill, but feels that the urgency is not like it was last year and thus they may have to settle for less.
Economists are divided on the need for an expanded housing stimulus plan and some feel that by not doing something will likely not be good for the economy.