Will or Should the Homebuyer Tax Credit
Program Be Extended into 2010

    Capitol Hill in Washington DC was vacant in August as Senators and Congressmen went home to listen to their constituents, but real estate and home builder lobbying groups were actively working on a campaign to extend the $8,000 first-time home buyer tax credit which is scheduled to expire on November 30, 2009.

    The American Recovery and Reinvestment Act of 2009, known as the "Stimulus Package" authorized a tax credit of up to $8,000 for qualified first time home buyers who purchase a principal residence between January 1st and November 30, 2009. The program has succeeded in reducing the nationwide inventory of unsold homes while helping many young families afford to buy their first home.

    The National Association of Home Builders (NAHB) and the National Association of Realtors (NAR) both hope to persuade Congress to extend the tax credit as soon as possible. Both associations contacted members of Congress even while they were in their home districts during their recess. One of the things they are pushing for, in addition to an extension of the first-time homebuyer credit, is to expand the program to cover all homebuyers through the end of 2010.

    Senate Majority Leader Reid has indicated that he believes “this is something we can get done.” Senate Banking Committee Chairman Democrat Chris Dodd and Republican Johnny Isakson have introduced a bill that would extend the credit through 2010 and expand it to a $15,000 maximum. In the House, two bills have been introduced to extend and expand the credit for either 6 or 12 months. Both NAR and NAHB strongly support these initiatives.

    With all this impetus, it would seem likely that in one form or another, the tax credit would at least be extended into next year, but...

    There is no such thing as a "sure thing" in Washington, DC. NAR spokesman Walter Molony recently justified his organization’s support for the tax credit saying that it is reducing the inventory of unsold homes and stabilizing pricing, benefiting the economy since in the opinion of NAR, "home prices overshot to the downside.” But, NAR also estimates that 1.8 million to 2.0 million first-time buyers will have taken advantage of the $8,000 first-time homebuyer credit before the current version expires. If that is true, the program, as it now exists is expected to cost about $15.20 billion.

    On the other hand, NAR's own estimate is that only 350,000 of the homes sold under the program would not have been sold without the tax credit. If you now divide $15.2 billion by only those 350,000 homes that might not have otherwise been sold, you get a whopping cost of $43,000 per additional home sold. And, the numbers will only get worse if the program is extended and expanded to cover all home buyers.

    These opposing views of the program could lead fiscal conservatives in both the Democratic and Republican parties to complain that any extension will only add to the ballooning national debt. As always, legislation that looks, at one moment, as if it will clearly be enacted can get delayed, watered down, or killed in the House and filibustered to defeat in the Senate if enough Blue Dog Democrats join the like-thinking Republicans.

    So, if you are in the market for a first home so you qualify for the current $8,000 tax credit, you should be working with a Realtor like Brian Ward Bradenton FL real estate specialist or Judie Berger who specializes in Sarasota real estate right now. You need to buy the home you've been wanting so you can close on it before the November 30th expiration of the current program. If you aren't already involved now, get on the phone and contact Connie Belmont, a competent Sarasota real estate expert right away and get started toward owning your piece of our Sunny Southwest Florida paradise.