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An examination of the first-time homebuyer tax credit

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  • Hembre, Erik

Abstract

A major policy response to the 2008 housing crisis was the First-time Homebuyer Tax Credit, worth up to $8,000. To estimate the tax credit effects on homeownership, I construct a quarterly first-time homebuyer time-series using American Housing Survey data and utilize a difference-in-difference framework using variation across income levels among first-time homebuyers. I estimate the tax credit induced 399,846 first-time homebuyers and calculate an economic cost of $27,010 per induced homeowner. Estimating state- and MSA-level effects using variation across homebuyer status, I find a strong correlation between local effect size and average home values, with a doubling in average home values implying a drop in effect size by 18.8 percentage points.

Suggested Citation

  • Hembre, Erik, 2018. "An examination of the first-time homebuyer tax credit," Regional Science and Urban Economics, Elsevier, vol. 73(C), pages 196-216.
    • Handle: RePEc:eee:regeco:v:73:y:2018:i:c:p:196-216
    DOI: 10.1016/j.regsciurbeco.2018.10.002
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    Cited by:

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    More about this item

    Keywords

    Homeownership; Policy; Public assistance;
    All these keywords.

    JEL classification:

    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • H5 - Public Economics - - National Government Expenditures and Related Policies
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

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