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Many people have been asking if the $8000 new home buyer credit expiring on December 1st will be extended like the cash for junkers program the auto market has. When Congress returns from their summer break the extension of the $8,000 tax credit for first-time buyers will be a hot topic. There is a reasonable chance (particularly if the housing market falters again) that the credit will get a second life and be extended for another six to 12 months, taking pressure off buyers, realty agents and settlement companies.
On a national basis, according to economists at the National Association of Realtors, anywhere from 300,000 to 350,000 additional sales of houses will be stimulated this year by the credit. Each home sale generates about $63,000 in downstream "ripple effects" elsewhere in the economy, they say. That includes sales of furnishings, appliances, lawn equipment, landscaping and renovation materials, plus relocation expenses. If you really look at these numbers the program is really paying off in helping the genral economy. Failure to extend what may be one of the most effective pieces of the Obama administration's 2009 stimulus legislation would cost jobs, economic growth and tax revenues, the housing groups argue.
The Washington Post reported that both the National Association of Realtors and the National Association of Home Builders - are mounting lobbying campaigns to make the case for extending the credit, and maybe even expanding it to $15,000. The effort is targeted first at the districts of members of the two tax-writing bodies, the House Ways and Means and Senate Finance committees, but is expected to cover most other members of Congress as well, according to officials of the two groups. The numbers of houses sold in each congressman's district that are attributable to the tax credit; the economic ripple effects on local businesses, manufacturers and service industries; the number of new jobs and income generated; plus the additional tax revenue that all this activity will help produce for local governments can have some strong motivating effects.
Can any of this happen before the December 1st deadline? The key factor here is Congress's heavy load of higher-profile, pressing issues that will get attention before anything else in September and October. One case can be the health care reform which we see from all the media is getting the weight of attention right now. On top of that, a tax-credit extension would cost billions in lost revenue. In the end, the odds favor some sort of extension, probably later rather than sooner. The best bet is if you are ready to purchase a home then do so sooner rather than later.
$134,900 
