$8000 home credit actually costs taxpayers $43000?

[audtatious]

I found the following on another forum and thought it was interesting.....

http://www.calculatedriskblog.com/

"NAR estimates that about 1.8 to 2.0 million first-time buyers will take advantage of the $8,000 tax credit this year, with approximately 350,000 additional sales that would not have taken place without the credit."

"You can calculate the new $15 billion projection; 1.9 million times $8,000.

"But this only resulted in 350,000 additional sales. Divide $15 billion by 350 thousand, and the program cost is about $43,000 per additional buyer. Very expensive.

Now the National Association of Home Builders estimates that expanding and extending the credit through 2010 would generate 500,000 additional sales at a cost of about $30 billion. So this is approximately $60,000 per additional house sold. And I think the cost will be much higher."

Quite the deal, huh?

[telcoman]

I found the following on another forum and thought it was interesting.....

http://www.calculatedriskblog.com/

"NAR estimates that about 1.8 to 2.0 million first-time buyers will take advantage of the $8,000 tax credit this year, with approximately 350,000 additional sales that would not have taken place without the credit."

"You can calculate the new $15 billion projection; 1.9 million times $8,000.

"But this only resulted in 350,000 additional sales. Divide $15 billion by 350 thousand, and the program cost is about $43,000 per additional buyer. Very expensive.

Now the National Association of Home Builders estimates that expanding and extending the credit through 2010 would generate 500,000 additional sales at a cost of about $30 billion. So this is approximately $60,000 per additional house sold. And I think the cost will be much higher."

Quite the deal, huh?

Matt

I think you are using fuzzy math.

http://www.federalhousingtaxcr...q.php

Assuming all those first time home buyers are fully qualified they will be adding to our economy with renovation, furniture, carpeting painting etc putting many out of work people to work

[Urabus GodofTraction]

Frankly, I'm shocked the number is so low!

Greetings, comrade! Have you done your spending today, for the good of the motherland?

[audtatious]

Matt

I think you are using fuzzy math.

http://www.federalhousingtaxcr...q.php

Assuming all those first time home buyers are fully qualified they will be adding to our economy with renovation, furniture, carpeting painting etc putting many out of work people to work

And?

Is that like all those shovel-ready projects that were supposed to solve our economic problems out of the stimulus?

[smockers83]

The math is right, but it can be misleading. The math says it's $43,000 per house sold that wasn't going to be sold prior to (in theory). However, the cost to the taxpayers could also be shown as a relationship of all new homeowners to money paid out. This would significantly lower the cost per house sold.

Now the question is this. With this tax credit, how many more homes would actually be closed on than without it. One can be in the market to buy a house but not find one for the right price and yet be deemed a buyer (demand side). Also, a tax credit like that for all new homeowners also provides an incentive to buy up newer homes that are a) more efficient, b) higher in value, c) are a major problem area of the oversupply in the market, and d) not to buy cheaper homes so that higher-value homes don't go to the housing bank and get destroyed to reduce inventory.