Extend housing tax credit

Congress should call a time-out on the health-care battle and join forces to extend the $8,000 tax credit for first-time homebuyers. Unlike many of the federal programs that have turned into pitched battles along partisan lines, the homebuyer credit enjoys wide support on both sides of the aisle and in the community at large. With that in mind, our political leaders should step up to stop the program from expiring at the end of October.

The credit is available, as its name suggests, to people buying their first home and arrived at a time when conventional home sales were moribund. The program has already been a success, with more than 1.4 million buyers taking advantage of it to get out of the rent cycle and into a place of their own.

The National Association of Realtors estimates that number will climb to 1.8 million by the program's scheduled end and warns that the end is not far off, because of the time it takes to process loans and close on the final sales. That should be all the impetus Congress needs to act quickly.

If there is any silver lining, albeit a very faint silver lining, in the real estate collapse of the past two years, it's that homes have become more affordable for renters, especially middle-class families who had seen that dream slip away.

The tax credit covers as much as 10 percent of the home's value, up to $8,000, which in many cases would provide buyers with a substantial portion of the funds needed for a down payment. In some circumstances, that means the new homeowner would pay little or no extra each month to change from renting to owning.

There's an obvious benefit for society as well. In most cases, the new homebuyer will not be buying big, expensive foreclosures, but smaller homes. That puts money in the pocket of the seller, who, we hope, could then move into another home, enabling yet another homeowner to move on or up. It is a cycle that propels the real estate market in better times, but one that has been sorely missing in recent months and years.

Sure, some of those homes may be foreclosures, but even in those cases, every purchase helps move the market toward normalcy by cleaning out the inventory of bank-owned homes.

The market has shown signs of life, with sales of existing homes in July hitting their highest point in two years and new home sales increasing by nearly 10 percent. Real estate agents across the country are reporting big interest in the credits and they've joined with bankers and home builders to encourage Congress to extend the credit for a year.

Congress seems to be listening, with more than a dozen bills introduced to do just that. Senate Majority Leader Harry Reid has said he would support at least a six-month extension.

Certainly there are concerns about the cost: an estimated $15 billion by the end of October. But if it serves to stimulate such a major driver of the economy as the housing market and help put it back on solid footing, it would be money well spent.

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