I guess for some the extension of the tax credit is a meaningful gift. First time homebuyers, realtors and builders will benefit from this political noise. However what is it's benefit on the long-term sustainable impact to the national housing crisis?

I'm afraid not much.

A brilliant friend of mine said recently that the "whole notion of the transfer of payment-type stimulus, e.g. tax rebates, cash for clunkers and home buyer tax credits are proven failed efforts". Its like putting Band-Aid on a gunshot wound.

The notion that tax credits for homebuyers will stabilize housing is absurd. Approximately eighteen months ago the tax credit program for first time homebuyers was introduced during a time when unemployment was at 5.2%. Frankly, the program did ok but certainly did not set any records for home sales. This recent extension during a time when unemployment is now at 10.2% is probably not going to generate any real impact at all. Very few Americans will step off the sidelines to invest in a mortgage when the prospects of keeping their job may be at risk.

If congress really wants to do more to stabilize housing it needs first stabilize the economy. Job creation through a tax policy that promotes business expansion should be their number one priority. Additionally, if congress wants a more robust housing environment in America it needs to modernize the housing finance system. For without a retooled GSE and a modernized FHA and Ginnie Mae the prospect of a secondary market to create sustainable liquidity for housing is tentative at best.

Congress needs to get serious about housing, not continue to give the gift that can't keep on giving.

The Washington Post discusses housing stimulus HERE