As days tick off the calendar, the life span of the much-ballyhooed tax credit for first-time homebuyers is drawing to an end — unless Congress decides to extend it.
There have been more than a dozen bills introduced in Congress to prolong the life of the tax credit past the Nov. 30 deadline, and on Thursday Senate Majority Leader Harry Reid endorsed the idea of extending the credit for an additional six months. The housing market has been devastated in Reid’s home state of Nevada.
This week, the White House said its economic team is evaluating the credit’s impact on home sales and will make a recommendation to President Barack Obama.
I don’t think that this tax credit is putting under qualified buyers into homes. I think it is giving some responsible home buyers a chance at equity which will ultimately help turn housing around. I would be for extending the first time home buyers tax credit.
I would like to believe that John but when when you can use the $8K as part of the down payment the buyers have very little skin in the game and if prices fall further and or they loose their income they are underwater go default and the downward spiral continues.
Can the market function without $8,000 credit for first-time home buyers?
DALLAS - When Congress passed an $8,000 tax credit for first-time home buyers last winter, it was intended as a dose of shock therapy during a crisis. Now the question is becoming whether the housing market can function without it.
As many as 40 percent of all home buyers\ this year will qualify for the credit. It is on track to cost the government $15 billion, more than twice the amount that was projected when Congress passed the stimulus bill in February.
In the view of the real estate industry and some economists, all that money is well spent. They contend the credit is doing what it was meant to do, encouraging a recovery in the housing market that is gathering steam. Analysts say the credit is directly responsible for several hundred thousand home sales.
By Dina ElBoghdady
Washington Post Staff Writer
Friday, September 18, 2009
The Federal Housing Administration has been hit so hard by the mortgage crisis that for the first time, the agency's cash reserves will drop below the minimum level set by Congress, FHA officials said.
The FHA guaranteed about a quarter of all U.S. home loans made this year, and the reserves are meant as a financial cushion to ensure that the agency can cover unexpected losses.
“It’s very serious,” FHA Commissioner David H. Stevens said in an interview. “There’s nothing more serious that we’re addressing right now, outside the housing crisis in general, than this issue.”
I don’t believe that is the case, Mike. I believe you have to have the $$ to put down and receive a Tax Credit on your 2009 return.
Now, I’m sure there are those out there making “loans” to first time homebuyers with the expectation that the $$$ will be paid back with the credit.
IMO, the biggest problems arose from the creative financing, zero down, no doc, etc, etc, ad nauseum loans that let people who could afford a $150,000 home actually take out a $300,000 mortgage.
The government regulations about who should get loans is also a player in the mess.
Instead of an $8K tax credit (how much of that are you and I paying?) why not just eliminate the income tax.
About 50% of all homes sold here in Florida this year returned less that what was owed on them (ie. short sales). Once the 1st time buyer tax credit expires I predict an across the board $8K reduction to all existing homes currently on the market further depressing home sales.
