As both a Realtor and consumer, it would be hard not to notice what an overwhelming success the first-time homebuyer's $8K tax credit has been both nationally and on the Madison real estate market. Both homebuyer interest and housing sales shot through the roof before the ink was even dry on the legislation. Although lower prices and historically low interest rates have certainly been a huge draw, it's clear the $8K tax credit is primarily responsible for consumers' renewed interest in homeownership in the midst of the massive mortgage meltdown and ensuing housing crisis.
But progress may come to a screeching halt unless Congress extends the credit through 2010. Without an extension of the legislation, many people will miss out. Those who couldn't purchase before November 30th will miss out. Those entering the workforce late this year and early next year. And those re-entering the workforce over the next few months as the economy continues to improve. No doubt some home owners have been holding off from selling as long as possible as well, hoping for the market to improve. But they can only hold back so long. In addition, more and more short sales and foreclosures are coming onto the market all the time and may be exacerbated by exotic loans whose rates are about to adjust. This new inventory, as well as the pent-up desire of some homeowners to sell, could outstrip demand without a good supply of buyers, quickly driving the market back down.
Although there are no guarantees, the WRA (Wisconsin REALTORS Association) in conjunction with NAR (the National Association of REALTORS) are working towards an extension of the tax credit into 2010. Whatever the outcome, they do not anticipate an announcement one way or the other until we get closer to the December 1 deadline. Although the market has improved, it has not yet fully corrected itself. The credit needs to be extended for an additional period of time, as well as expanded, in order to build upon the progress already made. Uncertainty about the future of any homebuyer credit will only serve to dampen consumer demand. The best way to assure continued housing activity is to extend and expand the credit immediately.
A homebuyer is eligible for the $8K tax credit only if a home is purchased before (ie prior to) December 1st, 2009. That means that buyers have to locate a house, get an accepted offer, satisfy any contingencies included in the offer, secure acceptable financing and close on the property no later than November 30th, 2009. Accomplishing those tasks by November 30th will become more challenging with each passing day given the number of consumers scrambling to take advantage of the $8K tax credit before it expires. Moreover, because appraisal rules have changed and credit has tightened so dramatically in recently, it can easily take between 45 and 60 days to go from contract to closing.
If you would like to take advantage of the first-time homebuyer's tax credit, if you care about the stability of the real estate market, or if you want to support someone buying a first home, please contact your representatives in Congress and ask them to support extending and expanding the tax credit. If you are interested in learning how to take advantage of the $8K tax credit by November 30th, please contact Lake & City Homes Realty at 608.230.5553. We'll tell you everything you need to know to get you on the path to home ownership!
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Jolenta Averill, Principal
Lake & City Homes Realty