Americans, it seems, may prefer new wheels to new homes. Compared to the wildly popular auto trade-in program “cash for clunkers,” the $8,000 first-time homebuyer credit is sipping from the taxpayer trough like a Prius at the gas pump.
Numbers for both programs are a bit fuzzy, but the clunkers program, which won a $2 billion increase in funding in a Senate vote Thursday evening, seems to have burned through in ten days close to the amount of cash the first-time homebuyer credit cost in a month.
The Department of Transportation said this week it has received voucher requests worth $775 million since the program began on July 27. The program gives car buyers up to $4,500 toward a more efficient new car in exchange for sending their old gas guzzler to the crusher. Automotive industry experts say dealers may still be holding vouchers from the clunker program that — once submitted — will push the cost beyond its original $1 billion budget.
If real estate industry numbers are correct, the $8,000 first-time homebuyer credit cost $7 billion at most during the first six months of 2009. The Congressional Joint Committee on Taxation originally projected the plan would cost taxpayers $14 billion in 2009, so the payouts seem to be on track. According to the National Association of Realtors, 876,000 first-time buyers purchased homes during the first six months of 2009.
Asked why Americans seem more bullish on cars than cribs, Realtors spokeswoman Mary Trupo demurred. “I can’t comment on that,” she said.
Gary Dilts, senior vice president of global automotive at J.D. Power and Associates called it a matter of leverage. “Do the math on $8,000 compared to the price of house,” he said. “On a $20,000 car, you get a leg up on it.”
Dilts also said the auto industry has done a good job marketing the clunkers program. “A lot of people are looking for a reason to buy a car anyway. This is giving them one.”