As the deadline for the First Time Homebuyer Credit looms near, many are wondering whether or not that deadline will be extended. After all, it is undeniable that the credit helped to give the real estate market the shot in the arm that it needed to start feeling a pulse once again. At the same time, many are concerned that the deadline came far too quickly for many interested people to take advantage of the credit. After all, finding and closing on a home can take several months and, since the tax credit was implemented so quickly, many people weren’t even made aware of the credit in time to take advantage of it.
As might be expected, many groups and organizations have been advocating for an extension to be made on the tax credit. Among the most vocal organizations are those that represent housing and real estate interests. This is quite understandable as it is already too late for many people to take advantage of this credit, as all of the new regulations and guideline that have been recently set into place have significantly increased the amount of time it takes to close on a real estate sale.
According to many sources, Republicans who had previously worked in the real estate business have been pushing for the tax credit deadline to be expanded. After all, the months spanning from December through February have historically been the worst months in the real estate market. Therefore, by ending the tax credit incentive at the end of November, the market will essentially be getting hit by a double whammy.
On the other end of the spectrum, those who are opposed to the extension are concerned about the country’s growing budget deficit and the amount of government spending that is already taking place. Therefore, those who are in favor of extending the deadline will their work cut out for them in terms of getting the opposition on board.
So, what are the chances that we will see an extension? According to many experts, we are likely to see some sort of extension to the credit, though it may not be to the extent that some would like to see. Already, Congress is talking about extending the deadline for military personnel. Too many, this serves as a promising indication that additional extensions will soon follow, making it possible for even more people to take advantage of this attractive tax break.
About the Author:
Eric Bramlett is the broker & co-owner of One Source Realty, a boutique Austin real estate brokerage. Eric currently manages his Steiner Ranch real estate site, his Austin blog, and works with select buyers, sellers, and investors.
Eric, the $8K tax credit has been good incentive for alot of my clients to purchase places. My only concern is that all of them were going to purchase a place regardless of the tax credit. What are your thoughts on the long term impact of the $8K tax credit?
40% of homebuyers this year will qualify for the credit. Whether these buyers entered the market due to low interest rates, low prices, or the homebuyer credit is almost impossible to quantify. In Austin, with a lower median purchase price, I believe the credit has had a fairly large impact. Since our median price is lower, the $8k credit makes up a greater % of the purchase price, and so is a more attractive incentive than in other markets.
As far as long term implications of the credit (I’ll limit the scope to the real estate market,) I think it’s shifting future demand to the present. Rather than see a sharp decline followed by a sharper increase (than we would see without the credit,) we’ve seen somewhat of a “soft landing.” If the credit is not extended, one would think that the marginal appreciation (or flat line) we’ve seen over the past couple of months might dip back into depreciation. If we were to dip back into depreciation, it would likely prolong recovery.
Extending the credit, in my opinion, is the “safe bet” as we safeguard the gains we’ve made. While the housing market might be able to stand on its own feet at this point, I think there’s a strong chance that it can’t.
@Harold – Here’s a good read.
The first time home buyers credit its a great thing for our countries real estate market. We need a spark as a real estate market and this has helped alittle. I am glad they extended it.
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