Say NO to Extension of the Federal Tax Credit for First Time Home Buyers!!! (???)
The deadline for the federal tax credit of up to $8000 for first-time home buyers is fast approaching. In order to take advantage of this credit, escrow must be closed by November 30, 2009. If one were to count backwards from this, allowing for a 45 day close of escrow (not uncommon these days), this means that buyers will need to be in contract, at the very latest, by mid-October which means NOW.
The National Association of Realtors is urging Congress to extend this credit, which has been successful in encouraging home buyers to get off the fence, especially coupled with the still historically low interest rates and affordable home prices.
I’ll have to admit, however, that there’s a part of me that doesn’t want it to be extended. It’s not so much a matter of economic principles. Quite simply, I’ve always been the kind of person who takes deadlines seriously and makes every effort to keep them. I’m just not into extensions. One semester at Cal, I had an experience in a chemistry course that I’ll never forget. The weekly lab reports were due every Friday, and I remember staying up late to finish them, color-coding the different sections and re-writing whole pages when I made a mistake (this was before computers became commonplace). Imagine my chagrin when, at the end of the semester, my classmate, realizing that he’d fail without turning them in, threw together a dozen late lab reports, submitted them to the TA, and got 100%…100%!…on every one of them because the TA didn’t want to bother looking over them!!! Even though decades have passed since then, that sense of injustice still lingers.
But then again, I have clients who have been making a sincere effort to find and purchase a home, but for different reasons, have not been successful yet. When I think of them, going through the preapproval process, responding promptly to my emails and calls, even submitting offers that were not accepted because of the increased influx of home buyers and the reduction in inventory in some areas – when I think of them, I have to think twice. As much as my focus of business is on working with homeowners, I still have a soft spot for first time buyers and feel such happiness when handing them the keys to their new home. So, for their sakes, I’ll join the throngs who are calling for an extension…but only this once…
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8 Responses to “Say NO to Extension of the Federal Tax Credit for First Time Home Buyers!!! (???)”
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Jean,
I can understand you point about deadlines, but in many cases buyers are trying to get a property but are having difficulty getting into a contract.
Maybe an extension with the same amount and rules that are currently in effect currently would be OK.
I urge all in the industry (agents, lenders, title and others) to keep in mind the 11/30 deadline if they are in escrow. I wonder what the liability could be if someone in the chain drops the ball and escrow closes a day or two late and the buyer fails to qualify for the credit?
Agents and others should always keep a log of activity with time and dates to protect themselves and I think now it would be especially important to do so.
Thanks again Jean.
Brian
I understand where you’re coming from, Jean, but I firmly believe they should not only extend the credit but should increase it and make it available to all buyers of residential properties. If I have my way, the credit would be a mnimum of $15,000 and would be available to everyone purchasing a home that would be their principal residence. I don’t believe that investors should benefit, however. It should only apply to owner occupied properties. I believe this approach would really stimulate the housing market.
Kathy Wall
I think it is of vital importance for the feds to extend the credit. The Housing market is finally showing signs of stabelization and in our area of San Bruno, South San Francisco and Daly city showing slight increases. If they let the credit terminate on schedule I believe the Real Estate Market will fall backwards and lose all of the recent gains. We must remember that a new homeonwer will spend money at furniture, appliance, and hardware stores. We are still re-building the foundation. I heard some talk that only 15% of the buyers are taking advantage of the credit. That 15% is helping use up the inventory and stabelize the pricing and preventing others from going under water. That 15% might be true But that does not take into consideration the ripple affect. The new home buyer is buuying a home from a potential step up buyer. I blogged earlier about selling my mother’s home in an adult community. Two of the agents told me that the $8000 credit is driving the adult comminity market. Without the credit the buyer of my mom’s home would not be able to sell and therefore not buy in the adult community. That $8000 in my opinion has been one of the best moves the fed made to help us out of the economic mess.
It would be wonderful if the buyer can use the $8000 instantly as an additional downpayment to decrease the loan and decrease the monthly payments. I am not saying the $8000 to be used as part of the minimum down of 3.5% but in addition to the 3.5%. It will give the homebuyers instant equity and the lenders more security.
Bring on the Home Buyer Tax Credit Extention!!!!
Jean,
A deadline seems pointless if it is just going to be extrended, however for those first time buyers who have been trying to get into contract and haven’t been able to; it would be a great help.
Larry
I am a first-time home buyer from Southern California who has put offers on 20+ houses and seen over 150 since february when my wife and I first started looking for a house. Just today did we receive our first counter offer! Despite our looking, and submitting offers, the demand here is so high that we haven’t been able to even come close to buying a house. We are really hoping that we’ll make the Nov. 30th deadline but we just can’t say for sure, and right now the closing date on our counter is set for Dec. 3, so we may miss it by 3 days! Even extending the credit to people who are in escrow by Nov. 30 would be a good first step.
My husband and I are currently looking for a house, and we have been since we got married. I am a full on Type A personality, and I cannot be late for anything. BUT it is not our fault that deal after deal seems to fall away from us. It is ridiculous to say that it should not be extended because people should have closed before now!!!!!!!
Dear Jessica & Aaron (and all first time home buyers out there),
I totally feel your pain and for your sakes, am hoping that the deadline will be extended. I have a few clients who have also been looking for a long time and have been submitting good offers but have not been able to purchase yet, and it’s especially difficult if you’re dealing with short sales where the wait is not up to you.
Just to make it clear, my blog was written somewhat tongue-in-cheek, and I personally would like to see the tax credit extended. It’s not only good for first time home buyers but also for those who are trying to sell their homes and has the potential to “trickle up”.
Best wishes to you as you continue your home search!
Jean
Jean,
I have a first time home buyer who has been looking for almost one year. He has written 3 or 4 offers, but never ratified one. And, yes, he is still looking and not in contract yet. I guess he’s out of luck by now.
Shokoofeh Nowbakht
http://www.shokoo.com