My first time home buyers are whooping it up. Why not? The popular first time home buyer tax credit that was set to expire end of November 2009 may be extended through end of June 2010.
I have buyers who have been looking for months but are getting outbid so many times, or are running out of time waiting for the short sale approval/acceptance of their offers.
Even better, it isn't just first time buyers who have reason to celebrate. A new tax credit was introduced to aid repeat buyers. I wonder if this will apply both for buyers who want to move up as well as buyers who want to downsize.
Although the complete details aren't available yet, here are the key provisions.
First time home buyer tax credit
- Buyers must be in contract by April 30, 2010
- Buyers have 60 days from that day to close escrow to qualify for the tax credit
- Tax credit is $8,000 or UP TO 10% of purchase price
Repeat buyers tax credit
- Defined as homeowners who have lived in their residence for five years
- Tax credit is $6,500
But wait, there's more! The levels for the home buyers were increased! Good news, indeed, for at least one of my buyers who was making more money than the previous qualifying level. So now, there's a chance that he will qualify for the tax credit after all!
- Individuals earning up to $125,000, up from $75,000 for individuals under the current law
- Couples earning up to $250,000, up from $150,000 under the current law'
More tax credits.
Additionally, there are other tax credits that the homeowners can explore. Although folks may argue that these tax credits are costing us....think of another way to look at these credits. They will encourage folks to BUY! And when they buy more goods and services, they (and we) do our share to stimulate the economy.
- federal tax credits for energy efficiency. Time to replace that old furnace? Want to get double pane windows? Need to get better insulation? Want to replace that leaky roof? Old water heater on its last legs? There's an energy-efficient solution to meet your requirements.
- ENERGY (Energy Efficiency & Renewable Energy) STAR appliances that may apply to central air conditions, washers, dishwashers, freezers, refrigerators, and more. More on this as things develop.
Have fun shopping!
Pacita,
Even after reading your disclaimer at the end, I still tink that this is generally a bad idea. But, of course, if it is implemened, I am not to blame people taking advantage of something legit
Jon
People will always have differing opinions. But my buyers are ecstatic. They were getting so discouraged, and would have decided to keep on renting.
Now, if they buy a house, there's a chance they'll buy more goods and services.....and that's what I hope will happen.
This just gave my clients a much-needed boost and impetus.
I think that the expansion to the move up buyers makes the most since. There are only so many first time home buyers at any given time. However, there are more people with proven track records in their home that could make the move with a little incentive. I believe it still has to go before the Senate for a vote this week.
Raymond, it's a shot in the arm....having an incentive for repeat buyers may stimulate new activity among folks who either are planning to down size or move up. They say the vote may be up as early as tomorrow.
Pacita: While I am having reservations about aspects of the current tax credit, I can still see reasons for a variation of this going into next year. A lesser amount with some expansion to additional homeowners (this bill looks like it has it) would assist a larger segment of the market.
Now that it is here, and the market still being too sluggish (I still think we may be for a back to back recession) I think it would chill the market too much to just shut it off on November 30th.
A reduced benefit that fades away over next year would work very well. It truly should not continue indefinately. And, I agree with you about assisting the current buyers who just keep losing out. Many of them would buy without or without the credit and just can't win a home. I have ready, willing and able buyers who will be good homeowners - this extension should help reduce the panic and pressure of 11-30.
Cathy ---
I'm getting a split personality on this issue. For my buyers, it's hooray. As a tax payer, it's...unnnnhhh.
But since the National Association of Realtors supports this extension, I am placing my faith and trust on them to push for the things that will benefit us.
I am excited for my repeat buyers.....hopefully, this new tax credit will be applicable for those who want to down size,, too.
This is the best summary of the pending legislation that I have read.
Featured in the Group "Whacked!!!
Pacita: I caught this news last night ... my buyers are mixed ... some were highly motivated by the credit and others don't think much about it. I do see a correlation in perspectives ... those who are extremely tight on financing and do not make a typical Silicon Valley six figure income think the tax credit is a huge deal ... others who are being helped with $100,000-$200,000 gifts from parents don't give the tax credit much thought!
Hi Pacita,
Thank you for sharing an informative and helpful article.
John Pusa
Richard --- the article from Bloomberg gets updated, so that's a good link to bookmark.
http://www.bloomberg.com/apps/news?pid=20601087&sid=ayS36Cg5hu5w
Kathleen --- my REPEAT buyers are just as excited. Where I can get buyers who get $100-200K gifts from their parents? Definitely won't find them among my first time buyers looking to buy a home UNDER $250K
John --- mixed reactions or not, our first time buyers and repeat buyers are more inclined to make a move with this extension
Pacita, thanks for so clearly laying out all the terms of the suggested tax credit extension. Waiting to hear if it passes.
Leah --- I was hoping that REALTOR.org would have an update later than Bloomberg's. For the time being, we're all watching this very closely. My first time buyers are breathing a sigh of relief, and at the same time a deep sigh of frustration at having to compete over and over again. But they're not giving up!
It would seem here that first timers are not in much of a hurry...and I applaud the extension....at the same time...it prolongs the people who have a decision not to decide.