The First-Time Homebuyer Tax Incentives: Did They Work?

Abstract

Following the Great Recession, two important recovery acts provided incentives for a qualified first-time homebuyer to purchase a home: the Housing and Economic Recovery Act of 2008 (HERA2008) and the American Recovery and Reinvestment Act of 2009 (ARRA2009). Using the American Housing Survey and a difference-in-differences approach, I find that recent movers who qualified for HERA2008 were 8.2% more likely to choose homeownership, relative to movers who did not qualify for HERA2008. Recent movers who qualified for a tax credit under ARRA2009 were 9.3% more likely to purchase a home than movers who did not qualify for the credit.