THE CHICAGO IL REAL ESTATE MARKET, AND OTHER THINGS CHICAGO, FROM THE POINT OF VIEW OF A LITTLE WHITE DOG!
As you may know, one of my responsibilities here at Dean's Team Chicago involves scanning the business papers and key websites for info pertinent to the Chicago Real Estate Market.
I have been given this responsibility for a very logical reason. I am only four years old, you see, and my eyesight is far better than our other Team members who are much older!
We all know the big story these days. Aside from issues involving Distressed Properties, and Real Estate Market Trends, many of the Chicago Realtors with whom we network are talking about the First Time Homebuyer Tax Credit, established by President Obama as part of his Economic Stimulus Package last February.
The current program is geared at First Time Homebuyers who, jointly, earn less than $150,000 per year. If you haven't owned a house within the last three years, and you buy and close on a principal residence on or before November 30th, you will qualify for a fat $8,000 direct Income Tax Credit off your 2008 or 2009 Tax Return. (To take the credit against your 2008 Income Taxes, an Amended Return must be filed).
The credit comes irregardless of the first-time buyers normal tax liability. In other words, if the buyer owes no tax to the IRS, he or she would receive an $8,000 Tax Refund after buying their new home.
If you listen to Practicing Realtors in Chicago, and scan the websites of the Chicago, Illinois, and National Associations of Realtors, you would think extending the credit beyond its November 30th Expiration Day would be a lock. Indeed, just over 1/3 of our Chicago Real Estate Team's Buyer Transactions this year have involved our clients who plan to file for this credit.
But read The Wall Street Journal, and check out this story from today's edition by reporter John De McKinnon, and you will see that an extension of the deadline - or even an expansion to include more potential first-time buyers, or possibly ALL homebuyers, is no where near a lock!
The primary concern of the critics and the hesitant - the likely very high cost of continuing the program.
One student of the credit, Ted Gayer of the liberal-leaning Brookings Institution, estimates that the current program costs the U.S. Treasury, and by extension, U.S. Taxpayers, about $43,000 for each additional home sale it produces. His opinion: although roughly 2 Million new homebuyers are expected to take advantage of the credit by the planned expiration date, most of these - perhaps as many as 80% - would have purchased anyway even if there were no credit!
Expanding the credit to ALL home buyers, he continues, could increase the Fed cost to near $250,000 per home.
Even the National Association of Realtors does not dispute Gayer's estimates, but says the positive benefit of the program to not only home buyers and sellers, but also to real estate-related industries, far outweighs the incremental cost.
In Congress, a number of lawmakers, many of whom are Democrats, are also expressing reservations.
House Majority Leader, Democrat Steny Hoyer of MD, proposes only a one month extension of the first-time buyer credit, and a wait-and-see attitude before extending further.
Charles Rangle, NY Democrat and Chairman of the House Ways and Means Committee, sees value in a time extension, but is hesitant to expand the program to non-first-time buyers. ND Democrat Earl Pomeroy proposes holding off on any extension or expansion until a plan for paying for it is drawn up.
Senator Johnny Isakson, GA Republican, proposes offsetting the cost of a First-Time Home Buyer Extension, or an overall program expansion, by using funds yet unspent from the Federal Stimulus Bill. The Original Stimulus Program weighed in at over $785 Billion.
What has not yet been proven is whether an extension or expansion of this Housing Tax Credit would likely add more jobs than the overall Stimulus Program would.
Proponents of extending or expanding the credit, including increasing the income limit to as much as $300,000 for a married couple, from the current $150,000 level, would cost taxpayers an estimated $16.7 Billion. Chump change, you dogs? Didn't think so!
So the debate continues! But, if left unresolved much longer, the pending expiration might actually send some on-the-fence buyers to the sidelines, as the clock runs out for a likely close on or before the current November 30th closing deadline.
Have a strong opinion, you dogs, one way or the other? Call or email your Congressman, or Senator, and bark loudly when they answer the phone!
Please read my post this week via BlogChicagoHomes.com.
YOUR ACE REPORTER ON FOUR PAWS,
BUDDY HOLLY MOSS & DEAN'S TEAM CHICAGO
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