Housing tax credit cost more than it benefited — for homeowners

(By Ed Morrissey, Hot Air) - In my analyses of the homebuyer tax credits issued, renewed, and expanded by Democrats in response to the housing market collapse, I called it a waste of taxpayer money that only incentivized those already inclined and qualified to buy, skewed demand, and put off a much-needed correction in pricing. I left out something that the Wall Street Journal’s Smart Money noticed in Monday’s Zillow report, which is that it turned out to be a pretty bad deal for those who used the credit as well as taxpayers. Thanks to the artificially higher home prices that the tax credits provided, buyers have lost almost twice as much in value as the credit itself, and in some cases 150% more:

The government’s recent $8,000 cash incentive for first-time home buyers has proved even more costly for recipients than for taxpayers, according to data released Monday. Typical buyers have lost twice as much to price declines as they received from the program.

The median home value fell to about $170,000 in March from $185,000 a year earlier, according to Zillow.com. That means a buyer who closed on a house just before the tax-credit program expired in April 2010 collected $8,000 but has since lost $15,000 in value. Those who bought earlier in the program have done worse; the median price is down $20,000 from March 2009.