$5,000 tax credit for first-time homebuyers stalled by politics

March 08, 1992|By Steve Brown | Steve Brown,Dallas Morning News xHC v

Just a month after President Bush proposed a tax credit to stimulate buying, housing industry leaders are working to save the economic incentive as it makes its way through Congress.

In late January the housing sector was celebrating the White House's recommendation that first-time homebuyers be given a $5,000 tax credit. The credit -- which builders and Realtors say would jump-start the stalled housing market -- was considered a sure thing by many political observers.

Now housing officials are scrambling to keep the homebuyers' tax credit alive.

The first House Democratic counterproposals to Mr. Bush's economic plan, which passed on a 221-210 vote Feb. 27, do not include the credit. Nor did the House Republicans' plan, which was defeated.

"It's maddening," David Seiders, chief economist of the National Association of Home Builders, said recently. "There are some awfully funny politics going on here. There is no economic reason not to go through with this.

"I don't really know what the prospects are now for a package coming together now," Mr. Seiders said.

Because of its perceived popularity with middle-class consumers, homebuilders and Realtors were confident a few weeks ago that the tax credit would survive the political process.

In a recession where housing starts have fallen to their lowest point in more than 40 years, housing economists were predicting that the tax credit for first-time buyers would generate a minimum of 250,000 additional housing sales this year.

Mr. Seiders said builders now are worried that the economic incentive will get scaled down by the Democratic Congress or -- in the worst case -- cut altogether.

Lobbyists are already pressuring congressional leaders to include the tax credit in any final legislation.

"We're doing the best we can with our lobbying efforts to see it come out in one form or another," said Carolyn Dopp, who heads the issues committee for the powerful California Association of Realtors. "We feel that it's necessary to help first-time homebuyers get in the market, and it's being overlooked in Washington. They are losing sight of the people who really need the help."

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