Where The Housing Tax Credit May Really Shore Things Up

President Bush's proposed $5,000 tax credit for first-time homebuyers is likely to be most welcome in the South and Midwest, says economist David H. Resler of Nomura Securities International Inc. That's because home prices and incomes are a lot lower in those regions than in the Northeast and West.

Resler estimates, for example, that the $5,000 credit would be equal to nearly 40% of the required downpayment on an average-priced home bought by a typical first-time buyer in the Midwest--as compared to 20% of the required downpayment of a starter home in the West. And for the Midwestern family whose income is just high enough to buy a starter home, the $2,500 credit (the part available in 1992) would cover more than 200% of its federal tax liability, with such credits permitted to be carried forward for several years.