Sense on Cents

Is the clock about to strike midnight for the Federal tax credit to support housing?

Uncle Sam has implemented a wide array of programs to support the domestic housing market. These programs include:

1. Mortgage modifications.

2. Massive funding support for Freddie Mac, Fannie Mae, and the Federal Housing Administration.

3. Increasing the loan limits on mortgages eligible for purchase by Freddie and Fannie in certain regions of the country.

4. Capital injections into a number of large banks and mortgage originators via the TARP.

5. An $8k tax credit for new home purchases.

Of all of these programs, most analysts believe the tax credit has had the largest positive impact. Why has that happened? In my opinion, the tax credit directly impacts the buyer while the other programs are an attempt to support housing but are as much or more supportive of the financial organizations than the homebuyers. (more…)