After the global economic crisis, that was initiated by the subprime loan mortgage crisis, home prices across the US began to drop. In an effort to stem the fall in house prices, the US government introduced an incentive for individuals to buy a house for the first time.
Known as the first time home buyer tax credit period, it encouraged possible buyers to go ahead with a buy by providing a tax credit of up to $8,000, for any person who was under contract before April 2010. Such was the success of the first time home buyer tax credit period which not only did it help to stem the fall in prices, but it also aided prices rise.
Things were looking extremely good for the US property market up till the end of April 2010. With the nation looking to see recovery from the financial crisis, high house sales figures were leading the path. The figures weren't quite as impressive as they first appeared though as once the tax credit was no longer available; the market reacted by seeing house prices drop again. It became obvious that the high sales figures in the early part of the year actually reflected the fact that most home buyers were just bringing forward their choice to purchase a home forward from later in the year.
With house prices falling yet again, many individuals are asking when the first time home buyer tax credit period might be reinstated to give the market a increase yet again.
Many feel that the tax credit gives false market figures and doesn't aid to stabilize the economy in the long-term, whilst costing the government much needed tax revenue. Although people are likely to be in favor of such an advantage, many market experts feel that the market must be allowed to adjust naturally, and that if house prices are going to fall then they ought to be allowed to do so. Once the market has bottomed out, then buyers who are waiting for the best price might start purchasing again that would allow the market to recover.
Its also thought that the incentive was wide open to scams, with practically tens of thousands of claims being made by people who weren't even buying a property. With a legislation that is so open to abuse, it is clear to see why lawmakers may to be reluctant to reintroduce the incentive.
It is also understood that with re-elections looming, politicians are likely to be concentrating on more sensitive issues like the war in Afghanistan so as to win as many votes as possible. With opinion divided on whether or not the tax credit is a genuine advantage to the economy, such a problem is likely to take a back seat until the re-elections are out of the way.
So it would appear as though those who are trying to buy a house shouldn't rely too much on the first time home buyer tax credit being reinstated any time soon. Although its still a tonic that the government can utilize to give the housing market a increase should it be essential.
Author Resource:-
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