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First Time Home Buyer Tax Credit Extension; Will It Help the Housing Market

Posted on | November 10, 2009 | 3 Comments

At this point we all know that the first time home buyer tax credit has been extended into April 2010.  Not only has it been extended but it has also been expanded to move up home buyers.  Home buyers that have currently lived in their residence for more than five years and plan to move up will receive a tax credit of $6500.  With these incentives in place will it help the housing market?

No one knows the answer to this question yet but there is very little doubt that the initial first time home buyer tax credit helped to stabilize home prices.  The Case-Shiller Index has shown us four straight months of increases in home prices.  Although these increases are not large it is still significant to see the bottoming process in home prices.

With the extension of the tax credit it is likely that we are going to continue to see home prices increase over the next five months.  The question that many analysts have is what is going to happen when the tax credits stop?  There is a high probability that many future home owners will no longer look to buy a home when there is no tax incentive for them.  Only time will tell what will happen in this crazy housing market.

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Author: Mike Garner

Category: Current News

Comments

3 Responses to “First Time Home Buyer Tax Credit Extension; Will It Help the Housing Market”

  1. Matthew Casey
    November 11th, 2009 @ 1:53 pm

    Do you have to sell your existing home to qualify for the $6500 credit or can you just purchase a new primary residence?

  2. Mike C
    November 12th, 2009 @ 9:35 am

    Matt,

    According to the WSJ, (link above) it is unclear but they believe as long as you make the new home your promary residence, you should be eligible.

    I just “traded up” in July, but since that part it isn’t retroactive, I don’t get anything. I hope they re-visit that part of the extension, why retro part but not all of the bill?

    GL to you.

  3. Dennis Norman
    November 12th, 2009 @ 10:03 am

    I did a post on the tax credits last week with several updates following the legislation through passage…there were a couple of hundred comments with some good questions and answers on the credits…it’s worth reading through the comments if you have questions on the homebuyer tax credit…the post and comments are at:

    http://realestateconsumernews.com/financing/home-buyer-tax-credit-extension-update-house-passes-bill-on-to-president-for-approval/

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