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Did the 1st Time Homebuyer Tax Credit Attract New Buyers?

July 8, 2010

The conventional wisdom and the market statistics say “yes”, but there is a larger picture that needs to be viewed.  It appears that the credit only encouraged buyers to rethink their timing of their purchase.  According to Milton Ezrati, senior economist at Lord Abbott, what happened was this: people who were looking to buy all crowded their purchases into March and April to take advantage of the $8000 credit (which expired April 30th, 2010).  Home sales went uptimi almost 30%!  But then, after the end of April, sales went DOWN 30%.  Housing starts and residential construction followed the same pattern.  Remember “Cash for Clunkers?”  Same deal happened with that.  What that says to me is: we have not fixed the root cause of this depression.  It is a multi-faceted issue.

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