Most if not all of you know that my day job is in the mortgage business, so I keep a good "pulse" on what's going on in the real estate world and especially with real estate legislation.
For the past year, we've had the $8000 tax credit for new home buyers and I've definitely had a spike in new home buyers in that time. This has been great for business and also great for these new homeowners as well. I don't really look forward to my generation paying for the tax burden that will be a result of this $8000 tax credit for all new home buyers, but if it spurs the housing market back to where it needs to be, then it needs to happen, period. My only wish is that I could take advantage of the credit, but alas, it's not to be as my first home was purchased more than 5 years ago. I don't regret that one bit as I've learned a lot and gained equity in the meantime. I've also purchase other homes in the meantime and learned from them as well. Wouldn't trade it all for any other way.
So, what am I getting at? Capital Hill is talking of extending the $8000 tax credit to new home buyers until June of 2010 and I am in support of this, to be honest. This article explains that the Obama administration wants to see more data about what the tax costs will be for us tax payers before signing off on it. Some members of Capital Hill feel that the tax credit has had some very positive effects on the housing market and buying stopping it on November 30th, 2009 could undo a lot of the positives that have come from the initiative.
I can tell you this from my experience in mortgage banking: It is definitely impacting buyers' decision to purchase a home now or later. Many buyers are taking advantage of the tax credit as they see it as "free money," and they are right. It's essentially free money now (with a tax bill that will have to be made up for down the road of course from all tax payers) that helps Americans gain some extra tax refund money for improving their new home, paying off debt, saving, or spending to stimulate our still lagging economy.
Time will tell but we should know soon as our administration is saying that it should only take a few weeks to determine whether the future tax burden will be too significant or not.
Have a great week!