WASHINGTON -- In many ways, Sen. Johnny Isakson's push to expand and extend the popular $8,000 tax credit for first-time homebuyers is about helping sell what real estate agents and developers call "PVC farms" -- acres of unfinished, unsold and unsightly subdivision lots where PVC sewer pipes poke up through weedy plots.
Selling those lots, thousands of which dot communities nationwide, along with the remaining stock of unsold existing homes is critical to further stabilizing the ailing housing market, Isakson said.
The Georgia Republican is sponsoring a bill that would raise the maximum amount of the credit to $15,000, extend the homebuyer tax credit to all homebuyers and eliminate the income caps of $75,000 for an individual and $150,000 for a couple.
On Thursday, he also filed two amendments to a broader measure to expand unemployment insurance for millions of Americans. Both amendments would remove a requirement that only first-time homebuyers are eligible, extend the tax credit, which expires on Nov. 30, until June 30, and double the income limits for the tax credit to $150,000 for an individual and $300,000 for a couple.
"Of all the things Congress has done, it is the one stimulus that has worked," said Isakson, a former real estate executive whose similar proposal during the previous Congress helped lay the groundwork for the current homebuyer tax credit. "But we've got a long climb. This is designed to be a catalyst to start recovery. It will by no means be a panacea."
The $8,000 first-time homebuyer tax credit, backed by the Obama administration, has helped boost new and existing home sales and brought 1.2 million new buyers into the market since it was enacted in February.
Of those 1.2 million buyers, 350,000 wouldn't have bought a home without the credit, according to figures from the National Association of Realtors. The program is set to expire at the end of November, just as the real estate market enters its traditionally slow winter sales period.
This worries lawmakers such as Isakson.
"The first-time homebuyer tax credit has been great for that effort, but that's one strata," he said. "What about the rest of the market that is buying their third or fourth home?"
Critics question whether extending the credit is a cost-effective way to boost home sales.
"Senator Johnny Isakson now wants to extend the credit for another year, and expand it to $15,000. This extension would be a mistake," Brookings Institution economist Ted Gayer wrote in an online analysis. "The tax credit is very poorly targeted. Approximately 1.9 million buyers are expected to receive the credit, but more than 85 percent of these would have bought a home without the credit. This suggests a price tag of about $15 billion -- which is twice what Congress intended -- for approximately 350,000 additional home sales. At $43,000 per new home sale, this is a very expensive subsidy."
Still, there's been an increased bipartisan push to extend the credit. Democratic congressional leaders discussed a possible extension with President Barack Obama during a White House meeting Wednesday.
However, White House spokesman Robert Gibbs avoided answering a question earlier this week about Obama's stance on extending the tax credit.
Homebuilders, real-estate agents and the banking industry, meanwhile, have joined the push amid worries that without an extension, homebuyers who're under contract but haven't closed on homes by Nov. 30 may miss out.
"Now is the time for Congress to keep this recovery going by extending the tax credit through 2010 and making it available to more homebuyers," said National Association of Realtors president Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth. "We have all seen how the credit has been a spur to bring homebuyers into the market, and have seen the beginnings of a real recovery in the housing market. Housing has always led this nation out of economic downturns, and can do so again."
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