New opportunity to List your home or buy a home
First-time home buyers (FTHBs) have been getting tax credits of up to $8,000 since January as part of the economic stimulus package. But with that housing program scheduled to expire at the end of November, the House voted to extend it into the spring - and to expand it to many people who already own homes. President Obama should sign it today.
Buyers who have owned their current homes at least five years would be eligible, subject to income limits, for tax credits of up to $6,500. First-time home buyers - or people who haven’t owned homes in the previous three years - could get up to $8,000. To qualify, buyers have to sign purchase contracts by April 30 2010 and close by June 30 2010.
This will have a bigger impact on the housing market and economy than the original FTHBs credit. While that represented some 45% of all real estate sales in September and increased housing sales by 1% (they would have dropped by 6% without these FTHBs), this credit will have a far reaching impact to an even greater population. I believe there has been a pent-up demand for sellers who were afraid to put their home on the market and buyers who were not first-timers who had no incentive.
The housing market tens to slowdown as we approach thanksgiving and doesn’t begin to pick up until March. This new credit will give an unusual shot-in-the-arm booster to this otherwise slow time. By the time it ends on April 30th, the usual seasonal push will begin and the economy should be much healthier.
The credit is available for the purchase of principal homes costing $800,000 or less, meaning vacation homes are ineligible. The credit would be phased out for individuals with annual incomes above $125,000 and for joint filers with incomes above $225,000.
Real estate agents say the first-time home buyers’ tax credit that’s already in effect has boosted sales, much in the same way the Cash for Clunkers program increased auto sales last summer by paying car buyers as much as $4,500 for exchanging their old gas-guzzlers for new, more fuel efficient models.
I only wonder what would have happened if they had passed this broader credit initially, instead of only to FTHBs. That limited the sales impact to homes in the $80,000 to $200,000 range and to a lower income level of the population. Looks like the good wine WAS saved for last!