The Obama Administration is talking about renewing the tax credit for first time home buyers. However, they want to see how much it’s going to cost before getting behind an actual proposal going in Congress. A version of the extension is already circulating as an amendment to other legislation. I can’t blame the President and his people at all for caution.

Most of my colleagues really want that tax credit extended, or even expanded. They see a lot more potential sales. However, I have several concerns.

First, if the Feds keep extending the credit, potential buyers will lose the sense of urgency they have had this year. If the credit is improved, either by making it a bigger credit or my expanding who is eligible, the problem gets worse as potential buyers may hold off waiting for the Feds to offer an even better deal.

Second, all those first time buyers have created an artificial “mini-boom”, accounting for 42% of sales in September. They are particularly snapping up foreclosed homes (adding to the froth, and buying homes that may have serious problems that they don’t even know might be problems). On the surface, this sounds like an argument for extending the credit: can your market afford up to 42% of buyers going away? Surely prices are headed for a slump in December if the tax credit isn’t extended! The flip-side of this argument is this: how many qualified first time buyers are left?

This brings me to the final point. How many qualified buyers are there at all? Here in Nevada, we are dealing with an unemployment rate of 13.3%, and it’s up to 13.9% here in the Las Vegas Valley. The national numbers are only slightly better. People without jobs rarely qualify for mortgages. That means that well over 1 in 8 people in Nevada couldn’t buy a house if they wanted to, regardless of tax incentives. It also means that over 1 in 8 people is at risk of falling behind their current housing payment, regardless of whether it’s a mortgage or a rent payment.

Let’s work towards the long term health of the real estate market, not a short term fix.