PLEASE read this article carefully. If you are reading this, “The Senate” has NOT passed anything to do with extending the tax credit. This article shares a report that Senate DEMOCRAT leadership has reached an agreement. And as noted, the Republicans are not saying anything other than “We’re close.” Once leaders reach an agreement, the full Senate will have to vote. Then the House. Then the President must sign before ANYTHING changes.
Scroll to the bottom for updated links. This thing is changing by the moment!
The news wires are buzzing today with near constant updates on the possible extension / expansion of the first time homebuyer tax credit, which is set to expire November 30.
This just in moments ago from Reuters:
Senate Dems reach deal on homebuyer credit – Dodd
Top Democrats in the Senate have reached an agreement to extend the soon-to-expire $8,000 tax credit for first-time homebuyers, Senate Banking Committee Chairman Christopher Dodd said on Tuesday.
“We have that. Done,” Dodd told reporters. He declined to specify the details of the agreement.
BUT….
a Republican who has worked with Dodd cautioned that they were still negotiating on the measure, which could come up for a vote on Tuesday evening as part of a package that would extend unemployment benefits.
“We’re close, we’re close but I can’t get into any details until it’s a done deal,” said Republican Senator Johnny Isakson.
My Take
This potential extension is in CONSTANT flux. Now we’ve got a Democrat Senate leader saying an agreement has been reached and the Republican doing the bulk of the work on that side saying “not so fast” (my words, not Senator Isakson’s).
Hang tight. I suspect something is going to break soon with more details.
And remember, a “deal” between lawmakers still has to get past a Senate vote. Then the House. Then the President. NOTHING is set in stone until all that happens.
Other Mainstream News sources:
On Oct 27:
Bloomberg: Senate Close to Deal Replacing Homebuyer Tax Credit
Reuters: Q&A US Senate closes in on homebuyer tax credit vote (updated 10/28)
Washington Post: The home-buyer tax credit: Throwing good money after bad [Great article!]
On Oct 28:
Reuters: Senators eye extending home credit to end of April – sources
CNN Money: $8,000 Home Credit Still in Play
CNBC: Senate Nears Deal on Keeping Tax Credit for Home Buyers
AP: Senators agree to extend homebuyer tax credit
Business Week: Expanded Home Buyer Tax Credit Likely
On Oct 29:
Washington Post: Extension of home buyers’ credit has wide Senate support
Wall Street Journal: Home Buyer Credit Gets New Life
Reuters: Obama admin urges Congress extend homebuyer credit
On Oct 30:
Bloomberg: Vote on Extending Homebuyer Tax Credit Delayed Over TARP Issue
On Nov 4:
Bloomberg: Senate May Pass Homebuyer Tax Credit Extension Today
Washington Post: Senate passes bill extending homebuyer tax credit, unemployment benefits (Senate has passed the bill. House approval “likely” and possibly as early as Nov 5).
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Beaurocrats. What more information do they need.. this is the one are that they do not need further research. Realtors have supplied them with every fact and figure they could ever need. It's working,.. now sign the thing and get to work on health care, that should keep them busy!
From the same Bloomberg Article via CalculatedRisk:
UPDATE: I was told this is a done deal, but I haven't seen an announcement yet – so it might still change. The tax credit was expanded to move-up and higher income buyers. The amount of the credit was reduced to a maximum of $7,290.
Income eligibility for first-time home buyers stays at $75,000 for individuals and $150,000 for couples.
For move-up buyers, income eligibility is $125,000 for individuals and $250,000 for couples.
There is a minimum 5 year residency requirement in their current home for move-up home buyers.
The tax credit is the lesser of $7,290 or 10% of the purchase price.
The credit runs from Dec. 1, 2009 to April 30, 2010, with an additional 60 day period to close escrow. (So end of April to sign contract, end of June to close escrow)
Expect bill to be signed by Friday.
I had not heard that the credit would be reduced. I guess thats a step in the right direction…
Hey Benjamin –
After watching most of the afternoon, I just shut off CSPAN2 when the Senate adjourned for the evening. Nothing was voted on today (other than some procedural stuff). They are to take up debate tomorrow morning on the unemployment insurance extension which from everything I've read, is where an amendment to extend the home buyer tax credit will be attached.
There are numerous reports of the changes you mentioned, but there are also numerous reports that Sen Isakson is still pushing for additional considerations and Reid is still working his “phase out” proposal.
The bottom line is, until the Senate actually votes on and passes legislation and sends it to the House for consideration, anything can happen. And of course the House can also change the wording and send it back to a joint Compromise Committee. Look at all the changes that happened in the process to the current tax credit…
It's getting much closer, but I sure wouldn't call it a done deal.
As for the credit being reduced, Going from $8,000 to $7,290 isn't really much of a reduction. But I suppose it's better than nothing.
And for the record, I can't recommend to ANYONE that they should watch four hours of CSPAN Senate coverage. I think I'd rather poke a stick in my eye.
What constitutes a “Move-Up” buyer? Someone who bought a $350k home in 2005 finds their home worth only $200k now, and wants to buy a currently valued $300k home. They are purchasing a home at less than what they paid for their last home, so… will they qualify?
I wonder if extending the deadline means the economy is still in turmoil. In my area I see a bunch of developers having to hold high end properties til the point that they lose everything and are back to square 1. An increase, rather than a decrease, would seem to be the best strategy.
I don't know for what they are thinking so much. It is working now and with extension, some good results would come out for sure. Let this credit benefit to extend for some more time until our economy gets normal. How long they will manage to adjourn the senate like this, some conclusion has to come out.
We are not done paying for this one yet, I am not so sure that we need another credit or an extension to this one. Its just too expensive to keep doing.
-Tyler
Thanks for the clarification. I guess like any real estate deal, it's not done until the checks are cashed…
The problem with increasing (or having the credit in general) is that it artificially props up prices. That home worth $100k is actually only worth $92k. Increasing the credit will only delay the inevitable.
news can travel at the speed of twitter now
“without extending the tax credit NOW our entire housing market will be in for some ROUGH times. That's why we should extend it until (insert month) so things can recover more before pulling the plug!”
Replay argument again after extension when unemployment sits at 10+%, inflation kicks in, and interest rates are significantly higher. Actually, this scenario will probably prompt a bigger credit. yay for artificial floors!
I will be very surprised if it goes through, but will be equally happy
It's hard keeping up on it all the time! Thanks for the great info.
I'll be very surprised if it DOESN'T go through.
It's expensive, it does artificially prop up prices, and it may be getting people into a home that they really can't afford (and look where that got us a few years ago).
But it would probably be political suicide not to extend it. And every politician has one primary focus and purpose in life — getting re-elected.
Tony – so far “move up” has not been well defined. Several things I saw today said it was simply someone who has owned a home for five consecutive years out of the past eight years.
This is one of those things we probably won't really understand until after the bill is passed and the definition is clarified. Until then, it's all speculation.
Thanks for the great info, cheers!
I worked in TV news for 15 years before going into real estate. The newsroom motto was 'never let the facts get in the way of a good story'. It appears as though many real estate professionals have adopted the same strategy.
Is there really a possibility that this extension won't happen now? The only unknown seems to be for how much and how long.
The issue really creates ambiguations among the real estate brokers, clients and owners. Hope this issue be resolved. Visit this site for hassle free deals. Belleville Real Estate
Marty – I'd be stunned if the tax credit wasn't extended in some form. I do think it's premature to say exactly what form that will be.