An additional tax credit extension to keep the moribund U.S. housing market from getting even worse was being considered by Congress. The deadline for real estate closings to qualify for a federal home buyer tax credit worth up to $ 8,000 is 11:59 p.m. Wednesday. The House voted to extend the tax credit closing deadline to Sept. 30 for buyers who met the April 30 deadline to have a signed contract. But in the Senate the measure is part of a larger bill that also would extend unemployment insurance — a much harder sell. Home buyers will be left hanging if the extension is not approved.
180,000 deals affected by tax credit extension
As Congress messes with the tax credit extension, stakes are high for real estate. Contracts had to be in place by April 30 to be eligible. The tax credit closing deadline was initially June 30. But MarketWatch reports that the National Association of Realtors estimated about 180,000 buyers could kiss $ 8,000 goodbye if the original tax credit closing deadline is upheld. A big problem for buyers has been getting the mortgage approval on time as mortgage lenders work through thousands of applications.
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When the contract signing deadline expired April 30, the last-minute home-buying rush overwhelmed the companies responsible for handling the sales, including mortgage lenders, appraisers, title insurers and real-estate brokers. According to The Wall Street Journal, the bottleneck has especially affected short sales, where a lender allows a home to sell for under the amount owed. In contrast to normal sales, where only two parties negotiate the price, short sales, which generally end up resulting from the epidemic of foreclosures, are more time-consuming because they require all note-holders to agree on price. Even normal sales are at risk according to realtors.
Unemployment extension critical
Nearly 3 million taxpayers successfully claimed the home buyer tax credit through Might 22 — totaling more than $ 21 billion — as reported by the Treasury Department. The Associated Press reports that Senate Democrats have combined the tax credit extension with an unemployment extension for laid-off workers whose benefits are being phased out to the tune of more than 200,000 a week. Democrats are trying for weeks to pass the unemployment extension as part of a larger tax and spending package, but the bill died in the Senate last week. Republicans who were opposing the measure want to pay for the unemployment extension with unspent money from last year’s massive economic recovery package.
US housing market won’t at all change due to extension
The tax credit extension may help homebuyers who are waiting to close some of their deals, but it could have little to no effect on a U.S. housing market that seems to be withering on the vine. The home buyer tax credit was the catalyst that boosted existing home sales in April by 23 percent from a year earlier. New home sales increased 47.8 percent. But when the homebuyer tax credit expired at the end of April, home sales in May fell to the lowest levels since the Commerce Department started tracking home sales statistics in 1963.
More info about this topic at these websites:
Marketwatch.com
marketwatch.com/story/new-deadline-for-home-buyer-credit-nears-approval-2010-06-30?reflink=MW_news_stmp
Wall Street Journal
online.wsj.com/article/SB10001424052748703627704575298610215024500.html?mod=WSJ_latestheadlines
Associated Press
google.com/hostednews/ap/article/ALeqM5hLKyB9H7lUpiALFVlU7RRJa9-EfwD9GLKOT80
