Obama Signs Home Buyer Tax Credit Extension. Will It Be Effective?
It is finally official. The homebuyers'rntax credit has been extended to April 30, 2010.
President Barack Obama approved the extension as part of a $24 billionrneconomic stimulus bill signed Friday. rnThe bill also includes an extension of unemployment benefits to thernlongtime jobless and tax credits for some businesses.
The housing tax credit portion of the bill extends the $8,000 tax creditrnfor home buyers who are purchasing their first home from the current Novemberrn30 deadline and expands the program to offer a credit of $6,500 to other homeownersrnwho have lived in their current home for at least five years and are seeking tornrelocate.
Another modification to the original legislation raises the incomernlimits for program participation from $75,000 for a single purchaser torn$125,000 and from $125,000 to $225,000 for a couple. There are also credits available on arndiminishing basis above those income limits.
The bill was passed by the Senate on Wednesday evening and by the Housernon Thursday. Both bodies acted in arnbipartisan manner which has seldom been seen this year. The Senate passage was unanimous; the Housernvoted 403 to 12 for the bill.
Housing interests as well as the Obama Administration had lobbiedrnheavily for the extension. In arnstatement released after the House passage of the legislation, Mortgage BankersrnAssociation Chairman Robert E. Story, Jr., said, “At a time when wernare finally starting to see some signs of life in the housing and mortgagernmarkets, extending and expanding the homebuyer tax credit is a critical step tornkeeping the momentum. This has been one of MBA's top single familyrnlegislative priorities, and we are very glad to see that policymakers on bothrnsides of the aisle see the importance of this measure.
“The existing credit for first-time homebuyers has helped move arnsegment of potential homebuyers off the sidelines and into their firstrnhomes. By expanding it to qualified existing homeowners, we can helprnstimulate even more home purchases for qualified buyers. I also want tornapplaud measures in the bill that will help eliminate fraudulent use of the taxrncredit.”
The Associated Press quoted Rep. Shelley Berkley that the bill “will allow more people to purchase a home in myrndistrict and help stop the continued downward spiral in housing prices causedrnby the foreclosure crisis.” Shellyrnrepresents Nevada, a state that has been particularly hard-hit by the housingrncollapse.
Critics of the bill have said that it isrnmerely accelerating purchases that would have occurred anyway and creating yetrnanother artificial housing bubble.
MortgagernNews Daily Managing Editor Adam Quinones said, “Itrnis likely that the prior tax credit's Nov.30 expiration has already stolen a portion of housingrndemand from 2010. On a broader scale, the extent to which the taxrncredit 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 PresidentrnObama stressed that the measure is revenue neutral and will not increase therndeficit.
The NAR has published an informative page on the home buyer tax credit extension. READ MORE
READ MORE on the outlook for housingrn
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