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Thursday, October 29, 2009

New Tax Credit Would Have Limited Impact: Analyst

By John Spence

MarketWatch Pulse

BOSTON -- Fox-Pitt Kelton analyst Robert Stevenson said the Senate proposal for extending the $8,000 tax credit for new homebuyers would have a "limited impact" on home sales. A Senate committee reached a deal Wednesday to extend the $8,000 tax credit and offer a new $6,500 credit for some existing homeowners. "The potential inclusion of 'step-up' buyers is a plus, but the April 30 expiration, and the ownership and income requirements should limit its utilization," Stevenson wrote in a research note. "We're also skeptical that the tax credit will drive any significant incremental demand in the seasonally slow November-January period. However, given the number of people effectively trapped in their current homes, we expect this will result in a significant increase the number of listings as homeowners seek to test the pricing and 'sellability' of their existing home at little or no cost to themselves."

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