The U.S. Senate Actually Gets Something Right!

I've been complaining pretty much incessantly to friends about the stimulus plan recently passed by the US House of Representatives last week. In my opinion it is just more pork barrel spending and as the contents of the plan have become public knowledge I've pretty much been proven to be correct:
  • $500,000 for a dog park in California (I do love my dog...)
  • $2 million for more neon lights for Las Vegas (Don't they already have enough??)
  • $4.5 million for an "eco-park" in Florida

To see a more complete list of this total insanity please view the Wall Street Journal's article.

However, even though I'm not a fan of the plan as a whole there was an amendment made yesterday that would help the real estate business. It was drafted by Johnny Isakson, the Republican Senator from the state of Georgia, who actually has experience in our industry. His amendment, which passed unanimously yesterday, will (if it is included in whatever final stimulus bill is ultimately passed by our government) provide a much needed boost to the U.S. housing industry. Any purchaser of a primary residence will receive a tax credit of 10% of the home's purchase price, up to a maximum of $15,000. This is not a deduction, but a true tax credit which means that the buyer's taxes will be reduced by the full amount. It is not merely a loan requiring that it be paid back as the $7,500 credit which passed last year was. This new tax credit is not just for first time home buyers either but is for any purchase of any primary residence.

That is the rub for our Gatlinburg/Pigeon Forge/Sevierville real estate market - this tax credit is for primary residence purchases only. In a market where easily more than half of all of our residential sales are second/vacation homes this won't be as meaningful as it would be for a non-tourist community such as nearby Knoxville, TN where most homes are occupied by their owners as primary residences. This new tax credit will not apply to investment property either - only primary residences. Still, in the most challenging real estate market that I have ever lived through this seems to make a lot more sense than more neon lights for Las Vegas...

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