In something I see as an expanding snowball effect, the sentiment for extending the Home Buyer Tax Credit is growing daily. It is beginning to feel more like fear now that if this snowball is allowed to melt, home sales will fall into a black hole.
The IRS recently reported that over 1.4 million Americans have claimed the $8,000 first-time home buyer credit to date. And, it is widely asserted that this program has had a huge hand in helping to stabilize the housing market this year.
The current credit of $8,000 for first time home buyers has been in effect for sales as of January 2009 and is currently scheduled to end on November 30 of this year.
So far, it has been available only to those who have not owned homes for three consecutive years prior to purchase. The home must be a primary residence and income restrictions apply. Couples can not earn more than $150,000 and individuals qualify if they earn less than $75,000.
As the clock winds down on this popular incentive, housing industry advocates are worried about the consequences of its expiration - mainly that the headway which has been made could come crashing down and that the market will take a serious downturn when it ends.
"Just like the Cash-for-Clunkers program, there could be a hangover effect," said Mike Larson, a real estate analyst for Weiss Research.
Of course, NAR is aggressively pushing Congress to extend the credit until at least the end of next year. They are also asking for it to become available to all buyers, not just first-timers.
There have been numerous blog posts and articles dedicated to the pros and cons of the extension and both sides have valid points. One is that this a huge amount of government spending will eventually catch up with us and we will have to pay dearly in the end.
The other side is the mounting fear about what will happen when giveaway is over.
NAHB president, Jerry Howard has said, "If we don't extend and expand the program, the seeds of growth planted could die."
Senator Johnny Isakson, a former real estate broker, has revisited a bill that he tried to push through last spring to extend the tax credit, making it available to all buyers and to increase the amount to $15,000.
There may be two problems that could stand in the way of the extension right now:
- The White House is not supporting it. They are not standing in the way but are not pledging to do any work to make it happen, also
- Finding the additional money is going to be tough. $14 billion has already been allocated to it and this will cost billions more.
I see this issue as being driven by anxiety on both sides and will be curious to see who will win out and the ensuing effect it will have on the housing market.
Has the current tax credit program had an impact on you? Do you have a fear about it coming to an end?
Do you have questions about buying a home in the Metrowest area? I would love to talk with you. Please feel free to call me at 508-881-6230 - any time or E-mail me.
Copyright 2009 - Claudette Millette, President, TheBuyersCounsel
Ashland, Holliston, Hopkinton, Natick, Newton, Northborough, Framingham, Sherborn, Southborough, Sudbury, Wayland, Westborough