Home Buyer Tax Credit – Can We Afford It?
One of the more interesting numbers to come out yesterday was the cost per marginal homeowner of the $8000 first time homebuyer tax credit. It’s a rather astounding $43,000 per new homeowner. That’s what it costs to lure those that wouldn’t have bought into the housing market.
A couple sites in the blogosphere talked about this, one example is Calculated Risk. From that blog here is how the numbers shake out:
With regards to the tax credit, what really matters is the cost per additional home sold. And as I pointed out earlier today, even using the NAR numbers, the cost per additional home sold is $43.4 thousand.
Here is the math: 1.9 million buyers qualify for the credit (the NAR estimates between 1.8 and 2.0 million) = $15.2 billion.
The NAR estimates the tax credit resulted in 350 thousand additional purchases. So divide $15.2 billion by 350 thousand = $43,000 per additional home. And the numbers will get worse if the program is extended.
Source: Calculated Risk