Tax Credit

Of the numbers up on on home sales and it implies anybody who's simply hasn't -- home in three years. May and couple that makes less than 150000 dollars or an individual Nicolaus and 75. It's a pretty all encompassing program they've spent roughly ten billion dollars on -- thus far so it's expensive. But it is one of those stimulus things that I think it actually works joining us talk about it is -- Who's the chief economist for the National Association of Realtors Lawrence welcome to WRKO. For a short so it tell us about this tax credit has it been successful how many people abused it does should be extended the center.

cutting its intended impact you know one can debate over the big 800 billion dollars economic stimulus package and I have scrutinized over that. Special -- and ten billion. And there will be -- huge sum in any given -- about. In the background all of -- hundred billion dollar proper stimulus package -- one point five trillion dollar budget deficit. Step ten billion dollar that goes directly to the US consumers -- mistreated if I think that they intended impact of bringing buyers back into the market. And we kept saying cell activity abruptly twenty or 30% are here ask that the tax credit. And what is more important in the five prompted by -- is -- homeowners would have to remember -- 75 million homeowners across the country. And now they are beginning to see some stabilization and then go home values.

It's really a crippling thing. When you get you know economy like this and you you need -- be able to get out your house for whatever reason union and economically can't afford it anymore you need to move and you're just stuck. This would seem to be something that's helpful.

What looks -- their yes -- tricks and you would indicate that home values have little shot downward. During the audio is clearly what unsustainable. Things well out of whack but since that time prices have come down but he. When crashing below that on the little -- old. And that the resold it has destroyed saw much of housing world or ordinary Americans and and Americans have voted essentially saying mom I am has the typical -- automobile. -- to go out to a rest strong. Because they had seen their will let destruction in their home up we can so spectacular gains in the stock. Market recently but for the housing value that has not yet a -- Well almost here so extending the tax credit I would -- the middle of next year will lead us to a for the self sustaining recovery. But we're not quite different sound that stops -- and recovery because there's just some consumers with a few factors related to -- housing market.

Misty -- if you extended out through to next he put the ten billion dollar current cost on the table and you put it in the context of the trillions and hundreds of billions of bailout. But how is that country how the taxpayers of America. Paying for this and how would they pay for the extension you were asked for which we got a putting it out to the middle of next year.

Actually this really tight budget deficit -- their highest. Ever in terms of the actual figures. I hired -- these second war in terms of relative size. I think the economy. So what I see that comedy in it is very worst some of the burden on the future general wage and but we have to keep in mind this tax credit is -- likely going to the mainstream consumer. The money is not staying in Washington bureaucracy or the money is not going to Wall Street that somehow if you'll just back into -- drug that general economy. And given go -- Paula that. They unit would raise the deficit in in the short term up by ten billion and but. Big economic growth unfortunate what that you know when one -- that the overall. But adept -- any country that -- in packet out economic growth if the economy quote strongly. In the budget effort that's been steadily reduce the economy remained sluggish budget up to that wide ask. So -- home buyers coming into the market stimulating the economy. So the initial ten billion dollar could be easily peak or the economic broke that the subsequently. Would occur.

So -- saying docking unit effectively this is the best way to be spending stimulus dollars because it's going directly into the pockets of Americans -- any into a market. Where Americans gain their wealth.

Now he has some main street issue. And not only about the home buyers and home sellers that is about that's 75 million. How old owning families who have seen a sizable destruction in the housing wealth in the fall below the fundamental values. Stolen that and got back up a bit that will begin to -- consumer confidence and will lead to sustain -- all. Wrote in the Consumer Spending. Collect the cash what part of program I would say that would you know that's very questionable because social shifting of the demand. Our board and what Antoinette that in that connect collapse but the home buyer tax credit -- this. -- stabilize home values because once we have home values stabilization and and the consumers would no longer have the consumer that -- factor about. Why buy now when I can buy it later of and then people look into the market on maybe just normal decision making up factors -- and the Fear Factor.

Mr. Obama a question before we let you go you mentioned the cash for -- as we read now. That automobile dealership showrooms a completely empty that was an unofficial Stewart surge it was almost like being on steroids and now there's no action out there. Why would this not do the same thing when the program comes to -- whether it's November even if there's a modest extension at some point this tax credit goes away. Isn't that the Norton will get a stampede -- around and eventually get to know action whatsoever.

Now there does bicycle number of people sitting on the -- when I look at that they'd right now there's about five million additional -- adequate finance system -- hall yet guess sitting on the fast and the reason why I guess sitting on the Pakistan. Not just skittish about the housing market conditions but once Stacey home by he's consistently stabilize the moderately increased. They will reach into competent to into the market and that's what I'm referring to in terms of stuff sustained housing market recovery.