WASHINGTON, DC -- 11/04/09 --
The proposed extension of the tax credit for
homebuyers is likely to have a much larger effect on first-time homebuyers
as compared to current homeowners, according to results from the
Campbell/Inside Mortgage Finance Monthly Survey of Real Estate Market
Conditions. That's because the tax credit would average 4% of the home
purchase price for first-time homebuyers but only 2% for current
homeowners.
The proposed homebuyer tax credit, now pending before Congress, would
extend an $8,000 tax credit for first-time homebuyers. Additionally,
current homeowners would receive a $6,500 tax credit for moving to a new
principal residence.
Survey results show that the average price for homes purchased by
first-time homebuyers was $186,000 in the third quarter of 2009. In
contrast, the average price for current homeowners buying a new principal
residence was $309,000.
"On a percentage basis, the effect of the tax credit would be much smaller
for current homeowners," observed Thomas Popik, research director for
Campbell Surveys. "We estimate that the first-time homebuyer tax credit
will result in a 10% increase in home sales from March through November of
2009. We'd expect the effect of the proposed tax credit for current
homeowners to be about half as large -- from December until the tax credit
expiration in the spring of next year, it might be 5% of 3 million
transactions, or about 150,000 incremental home sales. Incremental sales to
first-time homebuyers could be an additional 300,000, for a total of
450,000 incremental sales due to the tax credit extension."
In the third quarter of 2009, current homeowners made up 38% of the home
purchase market, with first-time homebuyers accounting for another 42%. The
tax credits would apply to all income-qualified homebuyers, including those
who would have bought without the tax credit incentives. Using the
proportions of homebuyers indicated by the third quarter survey results,
Campbell Surveys estimates that the total cost of the homebuyer tax credit
extension could be as large as $7 billion for current homeowners and $10
billion for first-time homebuyers, for a total of $17 billion.
The Campbell/Inside Mortgage Finance Monthly Survey of Real Estate Market
Conditions involves more than 1,500 real estate agents nationwide and
provides up-to-date intelligence on home sales and mortgage usage patterns.
For more information on the survey contact:
John Campbell
Campbell Surveys
(202) 363-2069
Email Contact.
