The U.S. government did more than simply extend the tax credit for first-time homeowners recently. The federal program was expanded to include longtime homeowners. Bill Embry, president of the Peoria Area Association of Realtors, said there was a good reason the government elected to expand the program: It worked.
The U.S. government did more than simply extend the tax credit for first-time homeowners recently.
The federal program was expanded to include longtime homeowners.
Bill Embry, president of the Peoria Area Association of Realtors, said there was a good reason the government elected to grow the program: It worked.
"Lawrence Yun, economist for the National Association of Realtors, told us at a recent conference in San Diego that the tax credit was responsible for 350,000 to 400,000 home sales this year," said Embry.
Yun, part of the team that advocated for the government to extend the tax credit, told the nation's real estate professionals that boosting the housing market could limit the damage done by the recession, he said.
"(Yun) told us that economic development such as the tax credit helps combat economic pessimism," said Embry.
"The program expansion is a big deal. Optimism breeds optimism," he said.
The government action now extends the $8,000 tax credit for first-time home buyers until April 30, 2010. In addition, a $6,500 tax credit was extended to homeowners who purchase a replacement home before that time and close on that home by June 30, 2010.
"Extending the tax credit into 2010 will give even more buyers a chance to take advantage of the program," Embry said.
More people now renting property are in a position to take advantage of home ownership, he added, citing NAR statistics. "In 2000, there were 11 million renters in the United States with qualifying income to buy a house. In 2009, that number increased to 16 million," said Embry.
Embry said one of the issues discussed at the San Diego conference was a "bifurcated recovery" in the housing industry.
"That means while the inventory of homes in the lower price ranges is at a normal level, there are too many homes on the market at the high end," he said.
The tax credit can be used for any single-family home, including condominiums, co-ops and townhouses. Vacation homes do not qualify and the tax credit can't be used on homes that sell for more than $800,000.
The government also expanded the number of people who qualify for the tax credit by increasing income limitations - up to $125,000 for individual taxpayers and $250,000 for joint filers. The previous limitations were $75,000 for single filers and $150,000 for joint filers.
The tax credit does not have to be repaid if the buyer stays in the home at least three years. If the property is sold during the three-year period, the full amount of the credit will be recouped on the sale.
"One thing that Yun said was that this is likely the last extension. There won't be another government program (for the housing industry) after this," said Embry.
Steve Tarter can be reached at (309) 686-3260 or email@example.com.