Rob Sibcy, President of Sibcy Cline, Realtors in Cincinnati, OH, discusses stabilizing the housing industry by issuing a $15,000 tax credit.

The best single solution to ease the housing crisis – the $15,000 tax credit for all homeowners – did not make it into the stimulus bill after passing the Senate, but remains our best hope for a real estate recovery. We need an influential Democratic champion of this provision, and I believe that our LeadingRE members have connections that could help us win the ears of some of those individuals in Washington. A $2,000 tax credit in the 1970s – equivalent in today’s dollars to this proposal – was instrumental in turning that recession around. While today’s situation is much more complicated, this tax credit could be a similar tool. We need this desperately and we need it now. Unfortunately, partisan politics makes it difficult for anyone but a Democratic leader to lead this charge….but whoever does that will be doing what is right for our country and will be a hero in the weeks and years to come. Please get involved to try and develop this support.

– Rob Sibcy, Sibcy Cline, Cincinnati, OH –

A $15,000 TAX CREDIT WILL SOLVE THE CRISIS
President Obama has stated there is no quick fix to today’s economic crisis. Since the basis for the crisis is the collapse of the real estate market, then the case can clearly be made that the resurgence of real estate market can put an end to the crisis. A $15,000 non-repayable tax credit for all home buyers will jump start the economy and change the mood of Americans from fearful to hopeful.

THIS STIMULUS IS NEEDED NOW
Spring is traditionally the time when house hunters search for new homes in anticipation of moving their families prior to the start of the school year. Now is the perfect opportunity to introduce a stimulus package that will positively affect many aspects of the economy. At the current levels, it is anticipated that there will be 4½ million home re-sales and 500,000 new homes sales in 2009. This is significantly below recent historic levels. A $15,000, non-repayable tax credit for any homebuyer, (regardless of income level or the price of home purchased) will jump-start the economy faster than any other idea currently before Congress. There is but one stipulation, which is that home buyers taking advantage of this tax credit will be required to remain in their newly purchased home for three years.

IMMEDIATE IMPACT OF THE TAX CREDIT
The positive and immediate impact of the proposed tax credit will be a stabilization of the real estate market throughout the country. It will change the psychology of potential homebuyers, consumer confidence will return, and Americans will begin spending again. It will stop the free fall of home values and breathe new life into the construction industry. It will stem layoffs and begin reversing unemployment trends. It has been proven time and again that when the housing market is robust, people spend money. This $15,000 tax credit for anyone who buys a home in 2009 will help the banks, the public, homebuilders and hundreds of vendors who are part of the process. Some of the benefits and those who will be helped include:

  1. Finance companies and banks
  2. Moving companies
  3. Home builders
  4. Banks selling foreclosed homes
  5. Title companies
  6. Lawyers
  7. Insurance companies
  8. Interior designers
  9. Appliance industries
  10. Carpet and Painting vendors and installers
  11. Furniture companies

Additionally, this will cause the domino affect of new employment in many ancillary industries. (continued)

STABILIZATION OF THE HOUSING INDUSTRY Stabilizing the real estate industry and the arresting the downward spiral of home values will have the following additional impact:

  • banks will be able to adjust their capital due to the rising values of their loan portfolios
  • foreclosures will slow and/or stop
  • banks will be able to divest themselves of their growing inventory of foreclosed homes currently on their books
  • upward trends in the real estate market will allow local and state governments to begin recouping their tax revenues. Trends towards government insolvency will stop.

A TAX CREDIT CAN DRAMATICALLY CHANGE OUR COURSE
The Federal Government has the ability to make a swift and dramatic change in the perceived and actual lack of confidence permeating the nation’s economy and psyche. The most recent study of the housing industry shows every sector of the country declining in value, with the exception of California. Conversely, it also shows the highest ever affordability index of consumers’ ability to afford a home at 166. In layman’s terms, people have the money to buy, but they have no confidence that a new home will retain its value, much less gain in value. A housing stimulus such as the one proposed will have an immediate and positive impact on the economy, and further, it will not exclude anyone who can qualify to purchase a home, regardless of the price of the home or the buyer’s income. Everyone will benefit.

STOCK MARKET BENEFITS ALSO
There is one other important and positive benefit to this stimulus program: As the economy’s recovery is accelerated, the equities market will also react more quickly in an upswing. The stock market anticipates 6 months in advance when there is a mood swing in the country. This stimulus will impact the equities markets because investors who have lost wealth in 401ks and other investments will be encouraged to pursue a change in housing, once they see their investments recovering. From an overall perspective, if the 5 million new and existing home purchases that are predicted for 2009 receive a $15,000 tax credit, the cost to the Federal Government is $75 billion. If another 2.5 million took advantage of the same program and the 5 million purchases became 7.5 million new and existing home purchases, the cost to the Government would be a maximum of $112.5 billion, far less than the $2-3 TRILLION currently being proposed as necessary to stimulate the economy.

A $15,000 TAX CREDIT IS THE SOLUTION
There are many problems facing our nation. Going forward, a swift and strong resurgence of the housing market can rebuild Americans’ faith and confidence in our economy more effectively than many of the proposed “shovel-ready” projects which could take years to implement. A $15,000 tax credit for all qualified homebuyers is the solution to the crisis we are currently in, and Congress is urged to act immediately to pass single-purpose legislation enacting this tax credit. It is a win-win for everyone.