Will the Homebuyer Credit be Extended Again Past April 2010? Plus an Update on the $250 SSI Payment

5 comments

[Update June 2010] : See this article for the latest news on the September 2010 Filing Extension for the New and Existing Home Buyer Tax Credit
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With the deadline looming for the current home buyer credit that expires in April 2010 (with closing by June 30th 2010), many readers have asked if there is any update on a further extension of this popular tax credit. Recent housing data suggests that the housing market is still struggling with pending home sales dropping nearly 8 percent recently. The drop in pending (contract) home sales and unexpected declines in purchases of new and existing homes last month, adds 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, housing industry members and would be home buyers are asking is that will the home buyer credit be extended again past summer?

Undoubtedly there is significant negative sentiment for the home buyer credit, particularly from those home buyers who could not take advantage of previous versions with lower income limits and from most conservative groups and fiscally focused politicians who want the home buyer tax credit to expire as planned. 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. Besides the Fed’s mortgage-backed securities (MBS) purchase program, the homebuyer tax credit has been touted by some as an extraordinary success. Such, “success” can be claimed, providing the necessary political cover to advocate extending the program… especially since the simple fact is that it if doesn’t work — that is, if it’s not being utilized — that it costs nothing. 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 only a 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 will keep monitoring the status of this credit to see if an extension is proposed in any new bills and encourage you to subscribe (free) via Email or RSS to get the latest updates on the extension of this credit.


$250 Social Security payment

The other popular topic on this site is related to the proposed $250 social security payment in 2010. A number of social security recipients were awaiting this payment in lieu of a COLA increase, but unfortunately the Democrat-controlled Senate has rejected a measure by a 50 to 47 vote. The jobs bill, which contained the $250 SSI provision, was rejected despite President Obama’s backing. The payments which would amount to $13 billion, where earmarked in the jobs bill – which was deemed too costly by lawmakers trying to allay their image of big spenders.

The badly needed Social Security payments would have helped 57 million seniors, a risky number to overlook considering the fall elections and how badly Democrats are viewed ever since the recession became a reality. Now that lawmakers have slapped seniors in the face the historical return is that this year marks the first time since 1975 that Social Security beneficiaries didn’t receive a cost of living increase. An extra payment may become a reality later this year if a new jobs bill is introduced to further extend unemployment benefits or the COLA provision in President Obama’s budget is approved

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5 Comments on "Will the Homebuyer Credit be Extended Again Past April 2010? Plus an Update on the $250 SSI Payment"


Amanda
Monday 9:49 pm

I have had a purchase agreement signed since Janurary and because the seller’s lender has been sitting on it I probably wont close by the 30th which means because their bank was taking their sweet time I wont get the tax credit that I didnt wait to the last minute to qualify for. I feel they should extend the closing date but not the credit itself, people have had quite a bit of time to take advantage of this if they waited until the last minute that was their fault.

Andy
Tuesday 5:34 pm

>I have a feeling people who lowered their price last year and sold for a loss are going to consider themselves lucky when they see what happens to sellers after the credit ends. I'm looking for a home now and will not even start making offers until the credit ends. I don't qualify but will still use it to my advantage.

Anonymous
Tuesday 5:34 pm
>No, you can't extend it. The market has already been artificially re-inflated by enacting the tax credit with subsidized mortgage rates. Time to let the free market get back to work. Propping up home prices is not what anyone should want. People who bought during the peak made a financial decision. They have to live with their lost phantom equity. If they are underwater, walk away and make a business decision. We need prices to go down and interest rates to go up. Also, this tax credit is taking revenue away from the government. With record deficit spending, this tax credit should end so we can start balancing the budget. Giving away free money and entitlement programs is not how the system should be. Housing is not a right, it is a privilege. People who are buying because of the tax credit will find out later they are making a… Read more »
Anonymous
Tuesday 5:34 pm

>A better time to end the tax credit would be October or November 30. The market takes a natural downturn at that time and could find an equilibrium before the next spring market occurs. If at that time interest rates are still historically low, perhaps the impact would not be too great. Especially if the stock market remains optimistic and the jobless rate declines. There would be a negative psychological impact not to extend through fall that could produce an effect greater than the situation should reasonably develop. Should the real estate market take a precipitous tumble, more home owners would simply walk away from underwater properties and that could produce an unstoppable downward spiral.

Anonymous
Thursday 7:46 pm

>Interesting stats on the it offered:
* 1.76 million taxpayers have filed for this credit in 2008 and 2009
* $12.45 billion in credit has been claimed
* It appears as though the share of the homebuyer market consisting of first-time buyers topped out in November at almost 50%

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