I formulated the first first-time homebuyer credit back in 1975 when I was a revenue estimator on the Joint Committee on Taxation.  I didn't like the idea then, and I don't like it now.  The credit rewards those who would have bought a home anyway, most of whom have higher income than the taxpayers who are paying for it.  The taxpayers are mostly renters and get no tax breaks at all.  The only justification I can see for the homebuyer credit is that it may accelerate home purchase from next year to this year.  The overall number of homes purchased this year and next won't change much.  Check out this Urban-Brookings Tax Policy Center analysis, which makes these arguments in more detail.  This Congressional Research Service analysis shows how small the economic effect of the homebuyer credit is likely to be (See pages 7 and 8 for the results.).

The Joint Committee on Taxation estimated the first-time homebuyer credit would cost $4.6 billion when it was enacted on July 30, 2008 in the Housing and Economic Recovery Act of 2008 (P.L.110-289).  It increased that estimate to $6.6 billion when the credit was expanded in the American Recovery and Reinvestment Act of 2009 (P.L.111-5) enacted on February 17, 2009.  See the estimate in JCX-19, item 7 on the top of page 2.  Yesterday's New York Times front-page story said the credit has become so popular that it may actually cost $15 billion.  That's a lot of money for not much economic benefit and for a windfall to those have good enough credit to buy a home.