The first round of stimulus for the housing market (in the form of an $8000 tax credit for buyers) was so popular and effective that many were begging for legislation that would extend the program into 2010.With the housing markets entering the recovery stage, the current administration’s decision to extend the first time buyers credit of up to $8000.00 for purchases written up by April 30, 2010 and with escrow closing on or before the end of June 2010 is exciting news for the real estate market. The legislation has also been expanded to include a tax credit of up to $6500.00 for repeat buyers looking to change their primary residence if they have owned and lived in their current home for at least five of the last eight years. This is good news for buyers and sellers and it’s great news for real estate agents and brokers!
The first and most obvious benefit of the tax credit extension to real estate agents is more interest in home purchases for first time buyers. The initial release of the tax credit for first time home buyers generated an enormous amount of interest in home purchases. The last minute extension is sure to reignite the buzz over the program with the added urgency of the new deadline.
Another reason I am so excited about this extension is that in addition to the first time home buyer credit, existing homeowners will be more motivated to buy with the available tax credit expanding to include them as well. Whether current homeowners are upgrading to a larger home or even if they are downsizing by selling their current home, they will also be able to take advantage of the tax credit now. This will be certain to generate even more interest in home purchases.
This expansion of the legislation will also create activity in the real estate sales market as the existing homeowners that wish to take advantage of the tax credit will need to list their current home in order to purchase their new primary residence. These listings of homes for sale will in turn provide a greater properly priced inventory of properties for prospective buyers to choose from. With more sellers, potential buyers and increased inventory, real estate agents are in for some long overdue prosperity.
More good news! Not only did the deadline for the tax credit get an extension and the expansion now includes current homeowners, but the expanded legislation also included raising the maximum income limit to qualify for the credit by $20,000.00 dollars. Now there are a greater number of people than ever before that can qualify to apply for the tax credit program. This should mean that there will finally be a resurgence of activity for real estate agents.
As if the previously mentioned incentives were not enough, there is still another incentive that can help with one of the biggest obstacles that potential homeowners face; available cash for down payments and closing costs. For a number of people that would like to purchase a home, inability to come up with a large enough sum of money to cover the costs included in closing a loan is a problem. Some lenders are allowing what is called a bridge loan where prospective first time home buyers can use the tax credit toward their closing costs. A short term loan will be issued to be used for closing costs, or even possibly to be used to buy down the interest rate of the loan and is to be repaid upon receipt of the tax credit.
The recent extension and expansion of the tax credit program for home buyers has created more reasons for career minded people to get a real estate license and start new career. There has never been a better time to buy a home and the incentives to do so have never been better. The wait has been longer than expected but the conditions are clearly here for the real estate market to rise once more.
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About David Goldstein — David Goldstein is an Owner and Founding Partner of Colibri Real Estate, LLC. which operates online education providers Colibri Real Estate, Insurance License Express and License Tutor. Follow him on Twitter.