$8000 Tax Credit Probably Won’t be Extended

The popular $8000 tax credit for first time home buyers introduced last year is set to expire very soon.  How soon?  Well, if you don’t have a contract in place on a house by April 30^th you can probably forget about it, at least that’s what the word from Washington seems like.

This past November, when the credit was initially extended, Senators Johnny Isakson, (R., Ga.) Christopher Dodd, (D., Conn.) both said that the credit would lose its effectiveness to boost house sales if it was continued any further.

“This is the last extension of the home buyer tax credit,” Isakson said. “Tax credits like this only work by creating the sense of urgency to take advantage of it, and to bring the market back.”

Coupled with this, the National Association of Realtors is also not seeking an extension to the credit, although they admit that we may see home sales bolster one last time before its expiration.  NAR spokesman Lucien Salvant was quoted recently as saying “We think this one is going to do the trick… It’s developing right now that it’s going to have the same kind of surge that the last one had in November. When it got down to the deadline on the tax credit, there was an upsurge in pending home sales.”

Ironically, just last month The New York Times reported that “After several disastrous months for home sales across the country, when volume dropped by 23%, the pace appears to be picking up again.”  Of course this surge can be directly attributed to the fact that the credit is set to expire on April 30, and people are moving quickly to take advantage of it.

You may be thinking “whats so wrong with that?”  Well, in the most basic sense it’s like the story of The Boy Who Cried Wolf.  If we constantly change our minds and keep re-extending the credit, eventually consumers will be less moved by our threats of expiration and not take advantage of it at all.

So what do you think?  Should we extend the tax credit again or let it expire?  Let us know!

If you have any questions about the tax credit or anything else mortgage related, please don’t hesitate to CONTACT US and we will get back to you as soon as possible.