Update on Extending the First Time Home Buyers Tax Credit

Update on Extending the First Time Home Buyers Tax Credit

The First Time Home Buyers Tax Credit is set to expire on November 30th.  The reality of this deadline means that the buyers out now need to get a home in escrow by the 20th of October.  The Thanksgiving Holiday will add days to any escrow with financing, so a typical 30 day escrow may not be enough time to close before the deadline.

There has been much talk about extending the deadline for another year and more likely six months.  All that has happened to this point is that the House has passed a bill to extend the credit for Service Men and Women who are overseas for the next year.  This bill is expected to pass through the Senate.  The question remains: will the Tax Credit will be extended for all first time home buyers?

My hunch is that Congress may take a wait and see approach through the first quarter of 2010.  If sales slow, the credit most likely will come back.  Right now the big winners on this are the home sellers.  The price range of homes that have been impacted the most by this credit are the entry level homes and we have seen those home prices in Simi Valley rise by as much as $12,000.00.  The increased competition among buyers has caused may first time home buyers “settle” for homes with serious deferred maintenance, termite issues, inferior floor-plans, and inferior locations.  If come December 1st the tax credit is not renewed for everyone, I suspect many buyer will be much more patient and pickier over the low inventory offerings.