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
READ MORE on the outlook for housing