Diane Zorich

With the deadline looming for the current home buyer credit that expires in April 2010 (with closing by June 30th 2010), many are wondering if there is any update on a further extension of this popular tax credit.

Recent housing data suggests the housing market is still struggling. Various data and statistics points to evidence the housing market, at the center of the worst recession since the 1930s, is still struggling to rebound. So the question a number of realtors and the general public are asking is ... will the home buyer credit be extended again?

There has been positive and negative sentiment for the home buyer credit, however, in addition to allaying the weakness in the housing market, extending the home buyer credit again could be a smart political move in an election year.

Lawmakers, now more than ever, are looking for any successful mortgage and/or housing-related program that they can stand behind. Deficit issues and the concept of whether we're rewarding those who might have bought anyway will take a back seat. Keeping home sales going promotes home price stability, and that makes for less-grumpy voters as election time rolls around.

As of yet, there are few official rumblings about further extending the home buyer credit for new and existing home buyers. However, if the housing market and political climate continues to deteriorate I would not be surprised to see the credit extended again (albeit with slightly different conditions) to at least the end of the year.

I'll keep monitoring the status of this credit to see if an extension is proposed in any new bills and continue to post any new updates.

What are your thoughts on the following:

•· Has the homebuyer credit helped increase activity in your market?

•· Has it motivated sellers that were on the fence to purchase?

•· Should it be extended through the end of the year?

•· Does it lose its motivating impact each time it is extended ... as in yes ... this time we "really mean it will end" so buy now?

I've been Open Housing like crazy this month and chatting with lots of potential buyers and sellers that are roaming around on Sunday afternoons.

After much speculation, the Home Buyer Tax Credit has been officially extended. It now includes not only first time home buyers, but EXISTING home buyers that have lived in their home for 5 consecutive years out of the last 8 years. This criteria covers and benefits lots of folks.

I'm seeing a great deal of people that own homes and "have been thinking of selling for a while now". They're out looking and educating themselves on the market. They're still "thinking" but not doing anything. The phrase paralysis by analysis comes to mind.

No one has a crystal ball in real estate or quite frankly, any other industry ... HOWEVER ... there are times where you can pretty clearly see the signs of making a good decision. This is one of those times for people who are "thinking of selling". Remember, real estate, like the weather, is LOCAL, so my thoughts are geared to the shoreline areas of Connecticut

Let's review why NOW is a good time to sell

• Prices have stabillized.
• Transactions over the last several months have increased.
• Appraisers have a good selection of CLOSED SALES (comps) to appraise at a realistic current market values.
• There is high activity of buyers currently out shopping. Increased activity results in increased showings. The only way to get an offer is to have people looking at your house who are interested in buying. Just six months or so ago, you could have the best property at a below value listed and NO ONE was out shopping. Therefore, there was very little hope of selling due to the decreased (and in many cases non-existent) activity in the market.
• There are so many potential sellers that have been sitting on the sidelines for the last 18-24 months "waiting for the prices to go back up". I think these folks have finally realized that's not happening in the near future, because, it's NOT! We've leveled off for the most part, which is a vast improvement over being in a declining market.
• We don't know for certain what will happen when the home buyer credit expires and interest rates start to increase. We DO KNOW at some point BOTH THOSE THINGS will happen. And when it does, we can be pretty sure market values will not increase ... we'll be lucky to see them stay level and more likely to see them downwardly correct again due to those variables.
• Inventory levels of available homes are down due to all the sales over the last few months.
• And, last, if you are buying as well as selling, and qualify for the Home Buyer Tax Credit, there will be an additional $6,500 cash gift waiting for you, courtesy of Uncle Sam!

There are more reasons, but this short list should help many to recognize the signs of why now is a great time for Sellers to SELL!

And remember, it's important for people to speak with an experienced and FULL TIME Realtor in order to understand the many variables impacting the market today. This can make the difference in successfully selling for the best possible price or making some critical errors that will negatively impact on this very important decision.

Okay ... I'm interested in a real discussion. ALL POINTS OF VIEW WELCOME, ENCOURAGED AND RESPECTED. I'm not looking for platitudes and feel good/philosophical comments ... I'm looking for real feedback.

I want to understand what people understand and why they think they understand it.

The Home Buyers Credit was approved by the House of Representatives, and the Senate and now needs to go back to the House of Representatives and get signed by the President.

Here's an outline of what it's supposed to look like (barring any additional revisions I haven't heard about yet):

First Time Home Buyers Credit of up to $8000 is to be extended. Must be under contract by April 30, 2010 and closed by June 30, 2010.

Home Buyers Credit of up to $6500 will now ALSO be available to existing homeowners that have owned property for the last 5 out of 8 years. Must be under contract by April 30, 2010 and closed by June 30, 2010.

Does this HELP or HURT or BOTH ... and WHY?

I am of many minds on this topic.

Some of the benefits as I see them are:

The Home Buyers credit stimulated and increased sales in many, although not all areas of the country. This helps sellers that need to sell, helps buyers that want to buy due to currently low interest rates and significantly decreased home prices, it reduces inventory, stabilizes sale prices and assists the overall economy with the peripheral economic benefits that are derived from increased real estate activity (people need furniture, home repairs, contractors, landscapers, electricians, plumbers, Realtors, home inspectors, appraisals, attorneys, etc. etc.)

Some questions and concerns I have:

There are two things we can count on ... at some point the home buyers credit will end and interest rates will go up. Is what the current administration doing inflating another mini real estate bubble? What happens when the tax credit ends and the interest rates start to go up? Will we see another precipitous drop in market value and activity again? Are we just delaying the inevitable corrections that need to happen in individual markets? Or, will this "stimulus" push the housing market through this rough economic patch so everything stabilizes and the real estate market returns to normal levels of price stability and activity?

Then there are other points such as if the government can bail out the banks, well then they can certainly help the little guy as well with the home buyer credit. This is "free money" to home buyers, which they will then supposedly go out and spend to stimulate growth in the economy. Will this then aid in the so-called "jobless recovery"?

But ... is this money really free!!! At the end of the day don't we ALL have to pay for this? Won't we all have to pay for the Cash for Clunkers free money? The bailouts to banks? The cash for refrigerators for goodness sake!!!

I see lots of people looking at the home buyers credit from a personal perspective ... personal in how it helps THEM. I understand that, but shouldn't we also look at it from a bigger picture perspective also? Because although these things may help us TODAY ... will they hurt us done the road.

And if so, will it hurt more or less then ... and will it have been worth it? Should we be thinking about these things now, or continue to abdicate our personal responsibility in understanding how all these moving parts will ultimately come together?