Obama
signs Home Buyer Tax Credit extension. Will it be effective?
By
Jann Swanson MortgageNewsDaily.com 11.06.09
It
is finally official. The homebuyers' tax credit has been
extended to April 30, 2010.
President
Barack Obama approved the extension as part of a $24 billion
economic stimulus bill signed Friday. The bill also
includes an extension of unemployment benefits to the longtime
jobless and tax credits for some businesses.
The
housing tax credit portion of the bill extends the $8,000 tax
credit for home buyers who are purchasing their first home
from the current November 30 deadline and expands the program
to offer a credit of $6,500 to other homeowners who have lived
in their current home for at least five years and are seeking
to relocate.
Another
modification to the original legislation raises the income
limits for program participation from $75,000 for a single
purchaser to $125,000 and from $125,000 to $225,000 for a
couple. There are also credits available on a
diminishing basis above those income limits.
The
bill was passed by the Senate on Wednesday evening and by the
House on Thursday. Both bodies acted in a bipartisan
manner which has seldom been seen this year. The Senate
passage was unanimous; the House voted 403 to 12 for the bill.
Housing
interests as well as the Obama Administration had lobbied
heavily for the extension. In a statement released after
the House passage of the legislation, Mortgage Bankers
Association Chairman Robert E. Story, Jr., said, "At a
time when we are finally starting to see some signs of life in
the housing and mortgage markets, extending and expanding the
homebuyer tax credit is a critical step to keeping the
momentum. This has been one of MBA's top single family
legislative priorities, and we are very glad to see that
policymakers on both sides of the aisle see the importance of
this measure.
"The
existing credit for first-time homebuyers has helped move a
segment of potential homebuyers off the sidelines and into
their first homes. By expanding it to qualified existing
homeowners, we can help stimulate even more home purchases for
qualified buyers. I also want to applaud measures in the
bill that will help eliminate fraudulent use of the tax
credit."
The
Associated Press quoted Rep. Shelley Berkley that the bill
"will allow more people to purchase a home in my district
and help stop the continued downward spiral in housing prices
caused by the foreclosure crisis." Shelly
represents
Nevada
, a state that has been particularly hard-hit by the housing
collapse.
Critics
of the bill have said that it is merely accelerating purchases
that would have occurred anyway and creating yet another
artificial housing bubble.
Mortgage
News Daily Managing Editor Adam Quinones said, "It is
likely that the prior tax credit's Nov.30 expiration has
already stolen a portion of housing demand from 2010. On a
broader scale, the extent to which the tax credit extension
adds new demand is a function of buyer's perception of home
prices, liquidity in the secondary mortgage market, and the
health of the labor market. Overall, while the home buyer tax
credit extension is a net positive for the industry, there are
still several structural ineffficiences that must be addressed
before housing can gain recovery momentum".
In
signing the bill President Obama stressed that the measure is
revenue neutral and will not increase the deficit.
The
NAR has published an informative page on the home buyer tax
credit extension. READ MORE
For more
information about Lillian Wong & Associates and our services, please visit
my website at LillianWong.net or email me at
Lillian@LillianWong.com.
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