Real estate industry leaders say President Bush's proposal to give first-time homebuyers a $5,000 tax credit could have a powerful effect on the economy by accelerating home sales and providing work for thousands of unemployed people seeking jobs in home construction and related fields.
"It's a golden opportunity to do what it takes to deal with the 16 percent unemployment we're facing," said Jay Buchert, president of the National Association of Home Builders.
He said passage of the tax credit proposal could send 215,000 of the 700,000 unemployed home construction workers back to work.
Among the incentives to stimulate the economy that Mr. Bush proposed in his State of the Union address were several concerning the housing industry.
Besides the $5,000 tax credit, he proposed letting first-time homebuyers withdraw $10,000 from their Individual Retirement Accounts without penalty.
Real estate officials have said they will lobby hard on Capitol Hill for all of the administration's housing proposals, but they say the tax credit would have the most impact.
"The centerpiece has got to be the tax credit," said John Tuccillo, the National Association of Realtors' chief economist.
"I think it would have a tremendous impact on the economy. It appears that we're talking about a $22 billion to $50 billion increase" in the gross domestic product," he said.
In addition, Mr. Tuccillo said the tax credit could result in the sale of 500,000 more housing units in 1992, bringing the total number of units sold during the year to an estimated 5 million -- depending on when it would be enacted.
Dorcas Helfant, president of the National Association of Realtors, said the $5,000 tax credit would help many would-be buyers overcome the down payment hurdle to purchase a property.
"The tragedy is that we have the lowest interest rates in 18 years and people can't afford the down payment to buy a new house," she said.
Many would-be buyers with sufficient in come to meet monthly mortgage payments on a starter home lack the discretionary income to mount a down payment due to the high apartment rents they've been paying, she said.
"The tax credit should be the incentive that gets some buyers over the hump," said Robert Lefenfeld, vice president for the Baltimore-based Legg Mason Realty Group.
He said the proposed tax credit could have the same strong effect locally as it does across the nation.