Congress Likely to Extend Homebuyer Credit

Late last year, Congress extended an $8,000 tax credit for new homebuyers and created a $6,500 credit for some existing homeowners who sell their old homes and buy new ones. These credits were originally available for houses purchased under contracts signed by April 30, 2010 and closed by June 30, but new legislation may give a break to those who can’t meet the June 30 deadline.

With so many buyers rushing to take advantage of the credit, lenders and appraisers have had a hard time keeping up with the volume.  According to the National Association of Realtors, as many as 180,000 home buyers who met the April 30th deadline may not be able to close their purchases by midnight tonight.

Yesterday, the House of Representatives passed HR 5623, the Homebuyer Assistance and Improvement Act of 2010 by a vote of 409-5.  The bill would extend the June 30th deadline to September 30th, but would only apply to homes that were under contract as of April 30th.

Although the bill’s prospects for passage in the Senate are uncertain, Senate Democrats hope to make it more attractive by combining it with a measure that would extend unemployment benefits.

Meanwhile, the state of the national housing market remains troubling as foreclosure database RealtyTrac reported today that foreclosed properties accounted for 31% of all home sales in the first quarter of this year.  While this is down from 37% in Q1 2009, it’s still much higher than normal levels of roughly 1%.

In New England, Massachusetts and Rhode Island joined Nevada, California, Arizona, Florida, Michigan, Georgia, Illinois, Idaho and Oregon in the list of states where foreclosed properties accounted for more than one-third of home sales in the first quarter.

About the author

Thomas Fisher, CFP®

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