Homebuyer Tax Credit Extended and Expanded

The Senate unanimously voted 98-0 on Wednesday to extend the first time home buyer tax credit. It passed overwhelmingly in the House on Thursday with a vote of 403-12 and President Obama signed the bill today.

Not only was the first time home buyer tax credit extended, a new $6,500 tax credit for existing homeowners who have lived in their homes for at least five of the last eight years was added to the bill. The purchase must be made after November 30, 2009.

These tax credits will be available through June 30th of 2010; however, buyers who qualify for either of these credits MUST enter into a binding contract before April 30, 2010.

The bill also increases the income cap to $125,000 for a single person and $250,000 for a couple. And the credit is available for all homes purchased for $800,000 or less. This is ideal, as it will break up the middle part of the market that is currently stalled.

I've been predicting that home values will likely bottom in the fourth quarter of 2010. But the tax credit could change that. This is because of the extension to existing homeowners and the doubling of the salary limits for applicants. The new tax credits represent a substantial increase in the pool of eligible buyers, thus translating into more demand for housing.

This increased demand due to the tax credits will soak up some of the foreclosures expected to flood the market in 2010. I still expect foreclosures to increase over the coming months before peaking next year, bringing more cheap inventory into the market.

The spur in demand comes during the real estate market’s slow winter season, so it may help overcome the seasonal declines in home sales, which were expected to translate into downward price pressure. The presence of the tax credits, however, which would expire at the end of June (for contracts completed by April) could bring increased demand to the market during this normally slow season.

Best Regards!

David J Edwards
Real Estate Agent & REALTOR
The David J Edwards Team
Keller Williams Realty Southeast Sound
Phone: 425-890-8045
Fax: 425-902-1899
E-Mail: david@davidjedwards.com
Website: http://www.davidjedwards.com
Blogsite: http://www.davidjedwards.com/real-estate-blog.asp
Mobile Site: http://davidjedwards.mofuse.mobi
Community Reports: http://www.topmarketer.net/CSR/CSReport.aspx?CV4GU5KAYOEF
View This Week’s Market Conditions Around Your Home: http://www.homeinsight.com/Widget/default.asp?BFBMVVHW4HZT

The David J Edwards Team specializes in Residential Real Estate for buyers and sellers.