IFour months' worth of sales numbers show how important the first-time-buyer tax credit was to the Philadelphia region's real estate market.
In November alone, as Congress debated extending and expanding the $8,000 credit, set to expire at month's end, existing-home sales in the eight counties were 75 percent higher than in November 2008 - 5,076 vs. 2,894 - according to Prudential Fox & Roach HomExpert, using data from Trend Multiple Listing Service.
That was even better than the 4,445 sold in November 2007, which was a couple of months into the region's housing downturn, data show.
Congress has extended the $8,000 credit to April 30 (closings up to June 30). It expanded the program to offer a $6,500 credit to buyers purchasing another home who have lived in their current homes for at least five years.
Income limits have been raised for first-time buyers from $75,000 for single purchasers to $125,000, and from $125,000 to $225,000 for couples. Credits are available on a diminishing basis above those limits.
With most experts predicting a slow road to economic recovery, is there any chance Congress will extend the credit again?
"I think this is it for the home-buyers credit," said Joel L. Naroff, president of Naroff Economic Advisers in Holland, Bucks County.
"If there is another program, it will likely be for other big-ticket items such as appliances," he said. Such a program is "cheaper and may start broadening the consumption recovery."
Naroff does not believe that the housing market needs more of this kind of help.
"It may not be strong," he said, "but it looks like it can stand on its own feet in most parts of the country, including the Philadelphia region."
The National Association of Home Builders said the extended tax credit would increase home sales by more than 180,000, as well as add 211,000 construction jobs.
Association president Joe Robson said about 70 percent of all potential buyers, whether first-time or repeat, were covered by the credit extension and expansion.
The National Association of Realtors, whose members benefited mightily from the credit, has "been told that it won't be extended again," spokesman Walt Molony said.
Its chief economist, Lawrence Yun, believes that "as inventories continue to decline and balance is gradually restored between buyers and sellers, we should reach self-sustaining housing conditions and firming home prices in most areas around the middle of 2010," Molony said.
Economist Brian Bethune of IHS Global Insight, however, believes there are better than even odds that the credit will be extended one more time.
"I doubt that they will go beyond that," Bethune said, emphasizing the "positive impact" the credit has already had on lagging sales.
The Realtors association predicts that 400,000 sales of existing homes in 2009 will have resulted directly from the tax credit, Molony said.
Bethune's belief in another extension is based on what he considers a "political necessity."
"The November elections will be coming up, and Congress would be more inclined to do more than less," he said.
Unlike the existing-home market, new-home sales did not benefit greatly from the tax credits after the end of August, because September was too late to sign a deal that could be completed by the time the first credit expired at the end of November, Robson said.
Because the emphasis has been on the $8,000 first-time-buyer credit, builders such as South Jersey's Bruce Paparone are concerned that "the public is not very aware of the $6,500 tax credit" for purchasing a newly built home.
"We are running out of time for new-home buyers to buy and build in time to take advantage of the credit," Paparone said. "Building a new home immediately generates jobs for the economy. It would be unfortunate if this new program does not have the full effect of generating new construction."
Whatever one's opinion of the credit, one thing is clear: It is an expensive policy option, Philadelphia economist Kevin Gillen said.
"Since the consensus among economists is that the housing market is showing signs of stabilization, the only thing that extending it would achieve is to shift more home sales from the future into the present at a very high cost to the taxpayer," he said.
"When you combine this fact with that of a growing federal deficit desperately requiring tax revenue to reduce it, it is difficult to see what greater public-policy purpose could be achieved by extending the credit," said Gillen, vice president of Econsult.
Even if the housing market hasn't stabilized by spring, "it is also difficult to see whether merely extending the credit [without some additional policy interventions] would be sufficient to turn the market around," Gillen said.
The tax credit provided a useful spark for the housing market, "but now we need the oxygen of steady economic and employment growth to sustain its recovery," he said.