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April 6th, 2010 (Modified on April 7th, 2010)

Are Feb’s Numbers Enough to Extend the Homebuyer Tax Credit?

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The hot topic around the web yesterday was that February’s increase in homebuyer activity was the result of the pending expiration of the homebuyer tax credit.

According to the National Association of Realtors, “The Pending Home Sales Index, a forward-looking indicator based on contracts signed in February, rose 8.2 percent to 97.6 from a downwardly revised 90.2 in January, and remains 17.3 percent above February 2009 when it was 83.2. The data reflects contracts and not closings, which usually occur with a lag time of one or two months.”

The big question: Is February’s boost in homebuyer activity enough to spur lawmakers to extend the homebuyer tax credit again? The numbers for February’s pending home sales were only first available yesterday, April 5. That means March’s (pending home sale) numbers won’t be available until the beginning of May. By that time, all who wanted to take advantage of the homebuyer tax credit would have had to have their contracts signed — all contracts must be signed by April 30 (24 days away). We will, however, see some of February’s numbers expressed in March’s existing-home sales report due out on April 22.

The question remains: Is the accumulated evidence enough to convince lawmakers of the credit’s value?

Should the homebuyer tax credit be extended (again)?: Based on the results from our poll that we began on March 30, 2010, readers overwhelmingly voted that the homebuyer tax credit deserves another extension. So far, 75% voted for the extension, 16% said it was “time for it to go,” and 9% said they “couldn’t care less.”

Cast your vote:

Should the homebuyer tax credit be extended again?

View Results

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9 Responses to “Are Feb’s Numbers Enough to Extend the Homebuyer Tax Credit?”

  1. Gary Sterrett Says: April 7th, 2010 at 12:43 pm

    I hope they extend the buyers tax credit because it’s taken me a year to sell my house in this market and I deserve the tax credit.

  2. Linda Says: April 7th, 2010 at 3:46 pm

    Well with so many short sales being held up. And that’s under contact I think it should be extend. at least give them a chance to become a home owner.

  3. Tim Manni Says: April 7th, 2010 at 3:50 pm

    Thanks for your comment Gary!

  4. Tim Manni Says: April 7th, 2010 at 3:51 pm

    Thanks Linda!

    I hope everyone got a chance to vote in our poll!

    Thanks,
    Tim

  5. Jonness Says: April 10th, 2010 at 1:01 pm

    Don’t extend it. Let house prices fall back to levels where people can afford to buy them with the money they receive from working for a living. Once prices reach that level, the economy will be set for renewed economic growth and vigor.

    The problem with the tax credit is, it’s not free money. We end up borrowing the money from China, and then spend the rest of our lives as debt slaves trying to pay it back. And for what reason? To rescue sellers who made terrible financial decisions buying homes priced at 2x what they have been in the past compared to incomes? To rescue the banks who loaned money to these irresponsible greedy and arrogant fools?

    I say, the only way to teach them about the value of the dollar is to hold them responsible for their poor financial decisions. Otherwise, they end up taking the path of learned helplessness, and we must borrow even more money from China in order to bail them out for life. This sets up a behavioral pattern learned by their children, and we must then bail them out for life treating them like babies instead of responsible adults.

    I sure hope China has a lot of extra money to loan us for the next 50 years. This is going to get expensive. I’m left wondering what happens to the U.S. when the yearly interest on our debt to China exceeds our country’s income. Maybe the Chinese will be such nice people they just give us the money, and we never have to pay it back. Maybe we can become Chinese pets.

  6. Chaz Says: April 10th, 2010 at 4:33 pm

    Goosing sales with an expensive housing credit just temporarily props ups prices, and it is simply not sustainable. We’re still out of line of traditional measures of affordability and home price to rent ratios. This tax credit does nothing to solve that core problem. We simply shouldn’t be spending our energy into blowing hot air into a deflating bubble.

  7. Tim Manni Says: April 12th, 2010 at 2:43 pm

    Jonness,

    Thanks for sharing your point of view. You make a lot of good points — a lot of people believe that letting the markets heal on their own is the way to go. And you’re absolutely right: “it’s not free money.”

    Thanks,
    Tim

  8. Tim Manni Says: April 12th, 2010 at 2:46 pm

    Chaz,

    You’re right, these sales aren’t sustainable. It seems as though, those who could qualify for the credit desperately want it, and all others are more than ready to have markets move on (by themselves).

    Thanks for sharing,
    Tim

  9. Roberta Says: April 13th, 2010 at 12:24 pm

    I would love for tax credit to be extended. I signed my contract and purchased the lost, but the construction of the home will not be finished by June 30. I want to qualify for the tax credit and dont think I should disqualify because it will be finished in July rather than June.

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Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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