$8,000 Home Tax Break Update
It is looking like my predictions on the housing credit are not going to turn out to be accurate (and neither will zloj’s). Looks like Congress held off on extending UE benefits so they could bundle it with the tax credit and that ensures there is ZERO chance Obama will veto them packaged together.
In an effort to make the new credit more confusing and less economically beneficial, the credit amount will be reduced to $7,290 (no idea who came up with that number), but it will allow for “move-up” buyers to qualify for the credit so long as they either live in their existing house for 5 years or are willing to “state” that they have (This constitutes a fairly large number of recent home purchasers who procured the loan via “stated” income).
This newly extended / modestly reduced credit will only extend to April 30th, 2010 (plus 60 days for closing), though I would expect if the USA has not completely run out of ink in the printers that the credit will be extended one more time (perhaps to $6,480), as I doubt any politicians will want to stop giving away “free money” before the 2010 elections.
The next non-sense housing agenda that I have not heard any movement on is extending the limits on FHA conforming loans. That is currently set to expire at year-end and will keep FHA out of loans over $417,000.
I’m not holding out hope, but I will still wish for a Friday miracle that gets rid of this wasteful, ineffective credit.
See post from Sept 27, 2009 for original, inaccurate prediction
As far as the impact to the housing market, by the way, I expect this has little to no impact. This credit getting extended was more or less fully priced in.
I maintain my central belief that despite the past few months of rises, national housing prices median will not bottom until at least one year from now.