On a national basis, according to economists at the National Association of Realtors, anywhere from 300,000 to 350,000 additional sales of houses will be stimulated this year by the credit. Each home sale generates approximately $63,000 in downstream "ripple effects" elsewhere in the economy, they say -- sales of furnishings, appliances, lawnmowers, landscaping, renovation materials, plus moving expenses.
If you accept the numbers -- and some analysts consider them a stretch -- this means the housing credit provides a powerful, immediate stimulus bang for the buck. Failure to extend what may be one of the most effective pieces of the Obama administration's 2009 stimulus legislation would cost jobs, economic growth and tax revenues, the housing groups argue.
There are some early signs Congress may be getting the message. Bills already are pending in both houses to extend the credit for another year. Senate Majority Leader Harry M. Reid, D-Nev., whose state has been among the worst hit by the housing bust, reportedly now favors an extension of the credit. He was quoted to that effect by the Las Vegas Sun on Aug. 5, adding, "It's something we can get done."
Sen. Chris Dodd, D-Conn., chairman of the Senate Banking Committee and in a tight race for re-election next year, is co-sponsoring a bill with Georgia Republican Johnny Isakson that would raise the credit amount to a maximum of $15,000. Meanwhile, both the Realtors and the builders are pushing not only for extension of the credit, but for broadening it to cover all home purchases in 2010.
But can any of this happen before the Nov. 30 deadline? The key complicating factor here is Congress' heavy load of higher-profile, pressing issues that will get attention before anything else in September and October: health care reform, climate change and energy, financial system regulatory reform and a new Consumer Financial Protection Agency, among others. On top of that, a tax credit extension would cost billions in lost revenues -- a big negative when the federal budget deficit is already wallowing in record red-ink territory.
In the end, however, given the political economics of the housing credit, the odds favor some sort of extension, probably later rather than sooner. Don't bank on a bigger credit, however, or broadening the concept to cover all purchasers next year.