As the November 30 deadline approaches and first-time home buyers are beginning to realize they may be too late to take advantage of the (up to) $8,000 tax credit, the question on many minds is: “Will the tax credit deadline be extended?”
The answer from Washington is: “No word yet.” Today, President Obama’s housing secretary told a Senate committee the administration wants to see cost data before backing any extension of the credit.
Despite increasing momentum Capitol Hill to extend the $8,000 first-time homebuyer credit, fueled in part by a nationwide lobbying effort by real estate and mortgage lenders’ political action committees, President Obama’s housing secretary said Tuesday the administration has not decided whether to support the extension of the deadline.
Housing Secretary Shaun Donovan said the administration wants more time to better assess the cost of the credit, which expires on November 30. "Within a few weeks we’ll have sufficient data to get to a conclusion on this," Donovan said. "It’s a question of understanding more fully the costs to the taxpayer."
Even though Donovan said their "clear evidence" the credit has had some positive benefits and that its expiration could have "some negative implications" for the housing market, the administration may allow the tax credit to expire on November 30, saying the end of the credit would not be "catastrophic" because of other actions the government is taking to support the flagging housing market. Interest rates are being kept low and the Federal Housing Administration is playing a more prominent role in lending to homebuyers.
But lawmakers pushing to extend and, in fact, expand the credit are concerned the housing market is going "to die a sudden death" after November 30, as Sen. Johnny Isakson, R-Ga., said Tuesday. Isakson and other supporters believe that keeping the credit in place could further boost home sales, stabilize housing prices and generate jobs.
Isakson and Senate Banking Chairman Christopher Dodd, D-Conn., have co-sponsored an amendment that would extend the credit until the end of June 2010 and be available to single filers making up to $150,000 and joint filers making up to $300,000. Currently the credit is limited to homebuyers who haven’t owned a home for the past three years, who make half those amounts and who close on their purchases by the end of November.
When asked whether he thought the credit was spurring confidence or artificially inflating prices, Donovan told lawmakers he believes: "Given the decline we’ve been through, the likelihood that the credit is inflating the market beyond where it would be is very low."
