Survey: Tax Credit Extension Could Influence First-time Buyers

At least seven in 10 potential first-time homebuyers said an extension of the $8,000 tax credit would have at least some influence on their decision to purchase a home next year. According to Zillow.com, which conducted the survey, an extension of the credit would add approximately 1.86 million first-time homebuyers to the market between Dec. 1, 2009 and Nov. 30, 2010. Approximately 18% said an extension would be the primary factor in their decision to purchase a home. This equates to 334,000 buyers, Zillow said. In addition, 25% of respondents said the credit would be a significant influence and 27% said it would have some influence. "Although nearly two million first-time homebuyers may receive the tax credit if it is extended for another year, the incremental impact of the credit is far smaller," said Zillow Chief Economist Stan Humphries. "While 334,000 may seem like a small number relative to the total number of homebuyers who would claim the credit, their addition to the market next year could make the difference between a robust annual increase in home sales next year and a flat or negative change in home sales relative to this year." He added while the credit would help to bring down inventory, it comes at a cost of an additional $14.86 billion in government spending. "For every five homebuyers who receive the credit, four would have bought their home even without the credit," he said.