Don’t Burst the Bubble: An Analysis of the First-time Homebuyer Credit and Its Use as an Economic Policy Tool

Sarah J. Webber, University of Dayton

Abstract

When faced with a looming real estate crisis, Congress hastily acted to stabilize the market by offering the first-time homebuyer credit (FTHC). This tax credit was promoted as a solution to remove the excess inventory of homes for sale and prevent a significant decrease in home values. The FTHC failed to deliver on its promises. Through an analysis of the FTHC focusing on the creation of the credit, the economic impact of the credit, and the alternatives to the credit, this article concludes that Congress improperly used the tax code to create the FTHC in the promotion of economic policy.