First-time Homebuyer Tax Credit Slashed from $15K to $8K
Posted Feb 12, 2009 @ 11:38 pm, Viewed by 930 Visitors, Read 987 Times.
The new tax credit for first-time homebuyers that's included in the economic stimulus package was slashed from the previously proposed $15K to just $8K and a far cry from the $20K the homebuilding industry wanted. Analysts expect the credit consisting of 10% of the value of any home up to $8K to have a smaller impact on the U.S. housing market than previously hoped. Last year, Congress enacted a $7,500 tax credit for first-time buyers (which had to be paid back over 15 years) and the impact on home sales was negligible.This time the tax credit is limited to first-time buyers who act between the start of 2009 and the end of November 2009. First-time buyers are defined as those who haven't owned a house for at least three years.
The credit of 10 percent of the value of a home, up to $8,000, if approved, would cost the government an estimated $6.6 billion. It would start phasing out for couples with incomes exceedling $150K and single filers with incomes over $75K. Buyers would have to repay the credit if they sold their home within three years.
Despite the tax credit being somewhat of a disappointment, it still constitutes yet another good reason for those still on the sidelines to get out there and buy a home. With rates this low, prices this depressed and now a further incentive in the form of a big tax credit for first-time homebuyers, the reasons to put off buying are dwindling.
If you're done trying to time the market and believe this is as good a time to buy as any in the last few decades, be sure to visit our website and take a look at some of the distinctive and historic Madison homes for sale!
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Social Bookmarking5 Responses to “First-time Homebuyer Tax Credit Slashed from $15K to $8K”
Hey Kevin, I imagine they were just trying to keep things simple. But as you know this is far from a simple problem so simple solutions are unlikely to prove adequate. I agree that these provisions don't go nearly as far as they should, but at least the fact that the credit never has to be paid back is a step in the right direction. I suspect there will have to be additional measures taken to generate the needed housing stimulus, especially in harder-hit areas. This is simply not going to be enough, IMHO. -Jolenta
I can't pretend to tell you I have a firm grasp on intricacies of these problems even in the "small" sphere of real estate. But it seems every "practical" approach, large or small, "means" something...which is why I was especially confused with no incremental max credit based on FHA limits. As an aside, any micro-markets "holding on" in the Greater Madison area (Like say Shorewood Hills)? Of course, I'm always interested in how the Mendota lake home are doing!
Definitely! There are a bunch of micro markets that are holding up well here. Sales are down but prices have held up. New construction, on the other hand, has been hit very hard. I should run some analyses on the older/mature neighborhoods and report back on my blog. Tell me what kind of measures you're interested in (absorption rates, median prices, volume, etc) and I'll pull the data for Lake Mendota and the usual suspects: Shorewood Hills, Maple Bluff, Nakoma, University Heights, The Highlands, etc. I've got quite a few neighborhood pages set up but they could use some more content. So thanks for the idea! The really hard part for me (in terms of market data reporting) has been figuring out which measures to report on...
Hmmm...what to report on? Now that's a great thread! I've had some success (for better or worse), comparing say first quarter 2007 vs. first quarter 2008 in a smaller area. I think you hit on most of the big one already. "Units sold", "Average sales price", "Median sale price", "Sales price as a % of list price". Feel free to DM for other market stat. ideas. But I think you got it 
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After 20+ years in IT and financial services on three continents, Jolenta Averill returned to her hometown of Madison Wisconsin in late 2003 to pursue her dream of starting her own real estate brokerage firm. Read More
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Jolenta: Well said -
IMHO, the bill was a bit of a disappointment than "progression". My first question is why just first time home-buyers. My other thought was sort more of a "they still don't get it" sentiment. An $8,000 credit and the income limits just won’t go far in many markets as you know well in some of your sub-markets. And why didn't they weigh the "scale" the credit like they did FHA loans? That is, why not authorize an $8,000 credit for buyers in areas where the FHA loan limit is $271,050 and raise incrementally to a maximum of $15,000 in areas where the FHA limit goes to $729,750. Seems to make more sense. Again, just my opinion. Thanks again Jolenta for a great post.
- Kevin