The federal tax credit meant to spur the housing market over the last year ultimately made things worse, experts said. Rick Sharga, executive vice president of RealtyTrac, a foreclosure-tracking firm, called the two homebuyer tax credits in 2010 — one was an extension of a rebate for first-time buyers — “fairly disruptive” to the struggling market.
“At best those two stimulus programs accelerated sales that would have taken place anyway,” he said during a conference call with reporters. “At worst, they probably did as much harm as they did good because the dramatic falloff of purchases … seems to have had the effect of further depressing prices.”
In November 2009, Congress extended the $8,000 tax credit that first-time homebuyers had enjoyed for most of the year. It also established an additional $6,500 credit for buyers who had owned their current home at least five years. Both credits expired this summer.
In July, the first month after the closing date for most homes purchased with the tax credit, home sales plunged by 27 percent from June — the largest monthly drop on records dating back to 1968.
Pete Flint, CEO of Trulia, a real estate tracking firm, said the fact that no major organizations — including the National Association of Realtors — is lobbying Congress for another credit speaks volumes. He said home sales will instead rely on a healthier job market.
