Real Estate Incentives Cut In Stimulus Plan

The $789 billion stimulus package may have limited impact on the very industry that brought on the economic downturn: real estate. The Senate's version of the package included an up-to-$15,000 tax incentive for home buyers. However, the Democrats cut the amount down to 10 percent of the home price or $8,000, whichever is less, and restricted the tax credit to first-time buyers who make purchases before Dec. 1, 2009.  After some political wrangling, it was determined the money would generally not have to be repaid, preserving a key distinction of the Senate version.

Ken Rosen, chairman of the Fisher Center for Real Estate and Urban Economics at UC Berkeley said: “Overall, I would say this is a mild positive, they had the provision in there that would have led to a wildfire in demand for housing and they took it out."  Joseph Perkins, chief executive officer of the Home Builders Association of Northern California, said $8,000 has a negligible effect in high-cost housing markets such as the Bay Area.

So, while the bill could increase home buying, it doesn't do nearly enough to jump-start building or stem the foreclosures that are driving down prices.                               San Diego income property