Auto industry forecasters are starting to sound almost giddy about cash for clunkers. Some predict that an estimated 16,000 sales in the few-days-old plan may push July's annual sales rates into 10-million unit territory.
Now some real estate executives are urging ramping up the current potential $8,000 tax credit so that first-time homebuyers can come up with more scratch for shelter. A $4,500 tax break on a median price $28,000 auto works out to a 16 percent subsidy for car buyers. An $8,000 tax credit on a median $198,000 home only equals four percent.
Fair's fair, say proponents of expanding the credit. But raising it to even $15,000 might seem greedy, worries National Association of Realtors President Charles McMillan. They likely will talk amongst themselves for a while.
There is another approach to consider. First-time buyers in 14 states, including Missouri, but not Kansas, can use bridge loans from state housing commissions to collect the $8,000 credit now, in time to increase their down payments. Mechanically, it works like tax refund loans that consumer advocates gripe about.
HUD Secretary Shaun Donovan said a couple months ago that his agency was exploring a national expansion of the program. Officials will be racing the calendar though. Depending on where you live, you may need to buy by mid-October to complete all the necessary paperwork in time to close before the Dec. 1 tax credit deadline.
I think that raises another question. Will HUD overhaul national lending rules for what effectively would be a 10-week or shorter lending window? Or will there be an expanded Scratch for Shelter plan to buy garage space for clunker replacements?