Congress Considers Extension of Tax Credit

Now that the opportunity for taking advantage of the $8000 tax credit is coming to an end, organizations such as the National Association of Realtors and the National Association of Home Builders (NAHB) have expressed their support for an extension of the credit. The NAHB believes that the tax credit has had a positive effect on the housing market, estimating that it has resulted in approximately 200,000 additional home sales. They recommend an extension through November 30, 2010, and they suggest that it be made available to all purchasers of a principal residence (not just first-time home buyers).

White House Press Secretary Robert Gibbs has said that "there has been quite a bit of success" with the home buyer tax credit and that President Obama is considering extending it to strengthen the economy and create jobs. NAHB Chairman Joe Robson said that "Housing is the best opportunity to put this country back to work. Prompt congressional action on the tax credit is a crucial first step to shoring up the fragile housing recovery and leading the economy to higher ground."

This is a controversial issue among real estate professionals, and not all are in favor of extending tax credits. But because first-time home buyers have been dominating the market this year, it seems clear that the first-time home buyer tax credit has incentivized buyers. The prospect of higher interest rates and the loss of the credit after the end of November of this year could negatively impact the housing market, and cause a backsliding of the progress we've made in stabilizing prices and reducing inventory.

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