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Realtor: Tax Credit Will Spur Home Sales

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By CARL ORTH

The Suncoast News

Published: June 5, 2008

NEW PORT RICHEY - While the federal government has been sending income tax rebate checks to stimulate the economy, another proposal in the works would offer a $750 tax credit to entice people to buy houses.

Greg Armstrong, president of the West Pasco Board of Realtors, recently spent a week in Washington with a delegation lobbying for bills such as the $750 homebuyers credit.

President Bush has said he would sign the proposal into law to help boost the sagging real estate market, Armstrong said. If all goes well, the tax credit could be in effect by July 1.

Armstrong rates the tax credit as the best tool available to prop up slumping home sales.

State property tax law changes such as Amendment 1, which Florida voters passed Jan. 29, have spurred some interest among homebuyers, he said.

Nevertheless, "It's still just a trickle," Armstrong said. "People are calling. People are looking."

In addition, builders likely would benefit if sales picked up, Armstrong said.

The government might be the best hope to stimulate the home market because banks don't have a lot of money to lend right now, he said.

Nobody is buying mortgage-backed bonds, which means Fannie Mae and Freddie Mac, the nation's top two purchasers of mortgages, have been "stagnant," according to Armstrong. When Fannie Mae and Freddie Mac buy mortgages, they make money for other home loans available.

As a result, Armstrong said, one of the few options right now is loans through the Federal Housing Administration.

Originally, the federal legislation would have offered the tax credit to people who buy a home in foreclosure proceedings, he said. Lawmakers "would have made the problem worse, not better," had they not revised the proposal to remove that requirement.

If not, buyers would have waited until homeowners went into default on home loan payments, Armstrong said.

Carl Orth can be reached at corth@suncoastnews.com or (727) 815-1068.

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