Realty Check

HUD Hints on Home Buyer Tax Credit

I have to say I was a bit surprised at the crafting of HUD Secretary Shaun Donovan's statement before the Senate Banking Committee today, specifically with regards to the first time home buyer tax credit. Donovan followed testimony from Sen. Johnny Isakson (R-GA), who is pushing for not only and extension of the credit through the first half of 2010, but an expansion to all home buyers with joint annual income up to $300,000.

Isakson told fellow Senators that without such an expansion, "We will have a dramatic and awful situation in the US from which recovery will be more difficult than what we've experienced already."

Going into the hearing, we already knew that the Obama Administration had yet to take a stand publicly on an extension of the credit, which turns into a pumpkin Nov. 30th. A few weeks ago, during a conference call on the government's loan modification program, I asked a "Senior Administration Official" about the credit, and he responded, "There are a lot of ideas out there for what to do with the extension of the home buyer credit, and other credits, and those issues are not yet finalized from our perspective internally." At the time I called that a "punt." Your safest play.

No punting today.

HUD Secretary Donovan, in his opening statement, said:

I am also aware of the strong support in Congress for doing more to support the housing market, including extending the First Time Home Buyer Tax Credit beyond 2009. At the same time, I am mindful that these proposals can be very expensive, especially at a time of significant budget deficits. I can assure you the Administration will work with Congress to fashion appropriate and effective home buyer incentives, mindful of both their benefits to stimulating new demand and their costs to the American taxpayer.

I don't know about you, but that sounded more like a "No" to me than a "Yes." When pushed, by the never-timid and always blunt Sen. Jim Bunning (R-KY) on why the Administration needed more time to study the costs, Sec. Donovan continued to say they would have an answer one way or another in a few weeks.

I think it's one thing to answer a question by saying we're considering our options and weighing the costs, and another thing entirely to cite budget deficits and the expense to taxpayers, twice, in a prepared statement. Just my ruminations.

Questions?  Comments?