Here’s what the new details should look like:  Senate Close to Deal Replacing Homebuyer Tax Credit

“The deal would reduce the size of the tax credit to 10 percent of the sale’s price, capped at $7,290, the people said. The credit would be available on home purchases that are under contract by April 30, and borrowers would have 60 days more to close the sale.”

“The income eligibility for first-time homebuyers would remain the same at $75,000 for individuals and $150,000 for couples. The income criteria for step-up buyers would be $125,000 for individuals and $250,000 for couples.”

“The credit would be limited to homes costing $800,000 or less. There is currently no price cap on home purchases.”

]]> http://generationyinvestor.com/2009/10/27/update-homebuyer-tax-credit/feed/ 0 http://generationyinvestor.com/2009/10/26/senate-plans-to-extend-then-phase-out-homebuyer-credit/ http://generationyinvestor.com/2009/10/26/senate-plans-to-extend-then-phase-out-homebuyer-credit/#comments Tue, 27 Oct 2009 00:06:06 +0000 Stephen Kline http://generationyinvestor.com/?p=1117 Leaders in the Senate are currently working to extend and then systematically phase out the $8,000 first-time homebuyer credit.  The credit which was originally destined to expire on November 30th, has helped to boost low-end home sales across the country.  Under the proposed extension, buyers closing on their homes prior to April 1st would receive the full $8,000 tax credit. [...]]]> Leaders in the Senate are currently working to extend and then systematically phase out the $8,000 first-time homebuyer credit.  The credit which was originally destined to expire on November 30th, has helped to boost low-end home sales across the country.  Under the proposed extension, buyers closing on their homes prior to April 1st would receive the full $8,000 tax credit.  The value of the tax credit would then drop $2,000 each quarter until it expires at the end of next year.

Whether or not this extension gets passed, it will be interesting to see how the housing market acts over the next 6 months.  One could argue that even if the credit is extended, it has already used up the majority of its impact.  If you think about it, first-time homebuyers who were interested in taking advantage of the credit have most likely done so by now.  So the benefits of extending it are probably quite minimal.  I’ll be looking out for some deterioration in home sales / prices in the upcoming months.  As I’ve stated previously, credits like this one and cash for clunkers boost current demand by pulling future demand forward.

If we get through the next few months without a significant lull in housing activity, it would be a very positive signal that we’re seeing a true recovery; as opposed to a temporary improvement caused by government intervention.

Where do you see the housing market going in 2010?