Looks like we have a NEW plan to consider on the extension of the home buyers’ tax credit. (We talked about the old one yesterday). Seems Baucus/Reid/Dodd/Isakson team has come to an agreement to merge their proposals into one. Media outlets are all reporting different income limits, but this is what the Congressional Quarterly reported as of late last night:
- $8K tax credit — amount remains the same for first time home buyers
- Extension — will be for sales contracts entered into by April 30, 2010, and escrow closed in 60 days
- Homeowners included — $6.5K tax credit for existing home owners as long as they’ve been in their homes for 5 consecutive years in the past 8 and meet the income limits
- Income limits increased — Single $75K–> $125K and Married $150K–>$250K$225K (updated by CQ, 10:41 am PT)
- AND - the White House endorsed the plan a few hours ago this morning.
My questions:
1) Why extend this to “step-up” buyers? Ultimately, I’ve read that something like 97% of all Americans fall into the income limits. Assuming that 60% of them are homeowners, then roughly 58% of all Americans can potentially qualify. How much is this going to cost?
2) Will this bring more instability to home prices as the flood gates are now open on this tax credit — this bill is looking more and more like the “cash for clunkers” program. If inventory moves thanks to this stimulus, will we experience a drop off in demand come April 30, and resulting dip in home prices?
As far as I can tell, it’s unclear how this proposal will move — as an amendment to the unemployment insurance legislation (HR 3548) or as a stand alone bill. No matter how it progresses, in order to be effective, the plan must stabilize home prices, drive increased spending for consumer products and help revive communities faced by foreclosure. Once those three areas are addressed, we’ll have a much healthier market.
We’ll keep you posted!
Popularity: 6% [?]
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October 29th, 2009 at 9:20 pm
We need to get this done. The credit provides more incentive to purchase and will help stimulate the economy even more come tax time next year.
November 5th, 2009 at 10:02 am
Anytime there is a hand out people line up. We bought a second home just because of the low prices and interest rates. The tax credit did help sell our other home. What it actually does is prop-up housing prices. Without the credit we would have been forced to take less. In the end that money will need to be repaid by the taxpayers. The feds are creating yet another asset bubble. We wouldn’t be in this mess if they hadn’t created the damn problem in the first place!