An examination of the first-time homebuyer tax credit

Erik Hembre

Regional Science and Urban Economics, 2018, vol. 73, issue C, 196-216

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.

Keywords: Homeownership; Policy; Public assistance (search for similar items in EconPapers)
JEL-codes: H5 I38 R21 (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:regeco:v:73:y:2018:i:c:p:196-216

DOI: 10.1016/j.regsciurbeco.2018.10.002

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