Buyers on Fire -- Good or Bad

There is a great deal of press lately about the $8,000 first time home-buyer tax credit expiring at the end of November.  Buyers are on fire for their first homes because of this incentive.  On October 15, The Wall Street Journal wrote an article entitled Cost Concerns Surface Over Home-Buyer Credit.  It raised many good points and it highlights my concerns about "Cash for Clunkers" and other government stimulus plans.  We all want the real estate market to rally and be consistently strong.  We all want our houses to sell and real estate agents want enough business to make a living.  But when is enough, enough?

Cash for Clunkers added excited to an ailing auto industry, but after it was over, demand dwindled to nothing.  So it made things look better for autos for a couple of months and then made things worse than ever.

Will the same thing happen when the first-time home-buyer's tax credit goes away?  And if we keep it for another month, six months or year; what will it cost those who pay the taxes that allow tax credits not to increase the enormous deficit.

A Realtor friend of mine also said that the first-time home-buyer's tax credit should be expanded to people moving up from a starter home to the next tier.  He suggested that would create demand for the mid-level homes.  But wouldn't that increase the inventory for the starter homes and again, how would the American tax payer actually pay for these bonuses?

I have come to agree that federal stimulus was necessary a year ago, but at some point in time we will need to pay the piper.  The government is THE PEOPLE.  New tax credits, TARP funds and boondoggles eventually must be paid by US.  At some point in time we need to allow the free market to determine prices and demand.

What are your thoughts on extending or expanding the home-buyer tax credit?  Can tax payers keep paying more and more or should the market determine who buys and at what price?