Real Estate in Northeast Florida and Around the World

Congress has passed and the President of the United States has signed into law an extension and expansion of the Home Buyer Tax Credit that was included in the Stimulus Act earlier this year.  This is a big "woohoo" for most home buyers and sellers, the economy and communities.

The bill extends the $8,000 tax credit for first time home buyers, and it also makes available a tax credit to home buyers who currently own a home and have lived in their current residence for at least five years.  The credit for these home buyers will be capped at $6,500.

Income levels for qualifying for the credit will be extended from the current limits of $75,000 for a single purchaser and $150,000 for couples, to $125,000 and $225,000 respectively.  Above those limits the tax credits will be reduced based on income tiers.

The National Association of Realtors has pushed strongly for the extension of the tax credit, as well as the expansion to a population of the move up buyers.  Some critics of this legislation have claimed that the tax credit has moved sales that would have occurred sooner or later to an earlier date and that, when the credit finally does go away, the market will experience another severe downturn.  From my perspective this is conjecture and not factual. Dealing with the actual buyers and recipients of the tax credit, it was the tax credit that got those buyers off the fence and over the fears of buying a home in an economic downturn.  And might they have bought sometime down the road?  Probably - but why is it a bad thing that they buy now, when prices and interest rates are at historical lows?  Oh, and lets not forget that these buyers actually QUALIFY for the loan programs - credit standards have never been tighter.

Lets face it - a tax credit is a tax credit.  One side of the aisle wants tax credits for businesses to allow that tax credit money to be used to employ people, who will then spend the money.  Maybe, if they actually use the money to employ workers, and even then it would be a long time for that trickle down to be felt.  The buyers I work with, friends and relatives who have been able to receive the tax credit, have all put the money right back into the economy.  Instantly.  They are buying home goods - furniture, blinds, curtains, lawn mowers, appliances, paint (and brushes) and flooring - and having work done to their homes, hiring local contractors and putting them to work.  And this is happening all over the country.  I am not sure that a business tax credit would have such an immediate impact on the local economies as has been experienced - and proven with data - throughout the second and third quarters of this year.  Guess who are not hiring laborers and investing in homes?  Banks who are sitting on foreclosed properties (although a few of them are getting smart and fixing some of these homes up).

I also agree that the extension period is long enough.  The economy is beginning to show signs of life again.  If the tax credit would not have been extended and expanded, the housing industry would have gone back into hiding - and my buyers told me as much.  The more qualified buyers that we are able to put into houses - the inventories will continue to decline and the money will continue to be put into the economy throughout the important holiday season and typically sluggish (in the housing market) first quarter.  This will keep the economy a bit of a helping hand, and by the second quarter, it should be moving along nicely without much assistance, taking us solidly into the third quarter.

So, let's cheer this bit of legislation and recognize that while a lot of the Stimulus, TARP and other government money wasn't a great idea, this one is.

See ya around the neighborhood!