I said in a previous blog that the tax credit had a 95% chance of being extended. Can I say 'I told ya so'?

Republicans and Democrats agreed, and President Obama was expected to sign it. Now it has passed the House and the Senate and Obama signed it today. An interesting twist is the expansion to Move-Up Homebuyers. Now you can get a $6,500 tax credit if you buy a house and have lived in your previous house for 5 out of the past 8 years. Other restrictions might apply, so consult a tax professional before making major buying decisions based on this information.

I'm assuming you meant to say that a single must not make more than 125,000 a year to qualify for the tax credit? 

The income level to qualify is $125,000 for single filers or $250,000 for joint filers

Yes, I did mean that was the maximum, not the minimum income level to qualify.

Thanks for the clarification.  I've been hoping that the tax credit would extend to next year.  That would allow me more time to look for a property to purchase.

Damn, my wife and I don't qualify! We would love to sell our house and move out of this crappy state.

And please don't block me from posting comments on your blogs, like the refiguy, (Robert Russo), did today. He is all touchy because I mentioned his bankruptcy, which was reported in the local news.

Wasn't this how we got into the current ecomic turmoil?  By getting people in houses they couldn't afford in the first place?  Is the current policy out to promote irresponsibility all over again?  Just asking. 

Isn't this a tacit admission that less taxes helps the economy?

It's an explicit admission that house prices are still too high in a supposed free market system.  It's also tacit admission that people have to continually buy expensive stuff on credit (i.e. that they can't afford) for this whole economic system to work.

JF:  I beg to differ (with your first sentence).  House prices are set by consumer.  Consumer can drive the prices up by willing to pay higher prices.  This is then inflated by infusion of funny / stimulus money.  Bottom line is the consumer needs to be responsible and buy a home they can affor and not a home they want to be judged by.  Its all too easy to blame the creditors or the banks or the politicians, but there is only one person signing the bottom line.  I do agree with your second sentence. 

When is the government going to offer tax credits for porterhouse steaks, of which "prices are still too high in a supposed free market system"?

Casooner, I will be the first to admit I am no economist and have a very rudimentary understanding of it.  I agree that house prices are set by the consumer.  With that being said, why is there a need for a tax credit to give incentives to consumers to buy a house?  If the house prices were lower (less at least the value of the tax credit) or people buying them at true market value would there be a need for this?

I'm not really blaming creditors on this one.  I'm probably placing fault more at the government which feels the need to keep prices of goods artificially high.  If people don't buy at high prices, creditors and banks don't have the business.  The free market should play itself out without the government trying to manipulate the numbers.

When is the government going to offer tax credits for porterhouse steaks, of which "prices are still too high in a supposed free market system"?

Exactly.

By doing this the government only prolongs the inevitable (the search for the market bottom) which causes the federal government to do things like extend unemployment benefits which equates to more spending.

When will the bleeding stop?  What are the nation's priorities?  We can't save everything and everyone.

A Question for any economic history buffs- Has the government always believed it can control domestic and global markets? Is this a relatively new approach to policy in American history?

 bakersfieldrealestate:  My husband and I, both retired, have been solicited at least twice by some rather suspicious-looking outfits to take advantage of the home buyers' tax credit.  We're hardly qualified, because our house is far from our first.  Presumably a few people, similarly unqualified, have gamed the system to "qualify," thus ultimately sticking other taxpayers with the tab; the "tab" may be nebulous, but I guarantee it's there.  When will it stop? 

When we bought our first house, we were scared to death about how we were going to make the payments.  But we did make them.  These days, it hardly seems to matter.  Those big, stupid taxpayers are there with a safety net to catch the ne'er-do-wells before they go splat on the rest of us.  I'm sick of it. 

Alicen, scammers are scammers, you're going to find them all over the place, government program or not. What the government does need to do is borrow some programmers from the credit card industry so these scammers can be better detected.

 Thanks everyone for continuing the conversation. Though some people are criticizing the tax incentive, Democrats and Republicans both supported it. It is helping the economy. If you are thinking of buying a house, now is a great time. There are historically low interest rates, a tax incentive, and prices that are low.  Of course, I would say that, but it is true. I can't predict if the prices will continue to drop, plateau, or go up, but there are signs that prices are starting to go back up. I have no crystal ball that can see into the future, but I have a feeling that we are near the end of the housing slump, and if this is the bottom, then NOW is the best time to buy.

"Buying" houses that take a lifetime to pay off or applying for loans that you know you will never pay off in your lifetime is willfully putting yourself in economic bondage.

Bravo.  We do think alike, Jfrancais.

Slavery is no longer socially acceptable so we've evolved into making it fashionable in the economic sense.  It's not as bad if people willingly put themselves into bondage.  That's what this bailout is all about-continuing the economic bondage of Americans so we can improve the GDP (i.e. Americans have to work if they have bills to pay and will settle for low paying jobs to maintain a nice credit score).

In a previous blog post I said:

"Will the $8,000 tax credit be extended? 93% likelihood. This might not happen by December 1st, but if it does it will probably be retroactive."

All Right. I said 95%, not 93% likelihood in my comment, where I claimed credit for calling this. But the fact remains that it did pass. Just wanted to set the record straight.

"Will it increase to $15,000? Only a 30% likelihood of this happening."

Yeah, this didn't fly. No surprise here. Only a 30% chance of this happening.

"Will the tax credit be offered to all purchasers, not just First Time Home Buyers? There is a 60% likelihood."

Maybe not all purchasers, but it does also cover Move-up Homebuyers. They get $6,500 in tax credit. These are people who have lived in the house for at least 5 consecutive years as the primary residence out of the last 8 years.

So, I claim that I was right on this call, too. 

Now, to honorerdieu:

You said in your comment:

"Thanks for the clarification.  I've been hoping that the tax credit would extend to next year.  That would allow me more time to look for a property to purchase."

The tax credit has been extended, but do not hesitate to take advantage of this opportunity. Interest rates may go up, and restrictions on qualifying for a loan will become tighter. Also, it takes longer than you think it would to buy a house because a lot of people are trying to buy houses now. Multiple offers are very common, which means that you might not get your offer accepted on your first try. 

Casooner90 said:

"Wasn't this how we got into the current ecomic turmoil?  By getting people in houses they couldn't afford in the first place?  Is the current policy out to promote irresponsibility all over again?  Just asking."

Casooner90, chill out. The restrictions are much tighter, and will only become tighter as time goes on. Now a much higher FICO score is required, and though there may be some loan modifications going on that would help people who bought houses in the past hold on to them, new loans requirements are already tight, and getting tighter. Also, in the past you could get a "stated income" loan, but now the loans require full documentation.

I made a mistake in my original blog because I said the maximum income to qualify for the tax credit was $125,000 and $250,000 for couples, but it is $225,000 for couples. Disclaimer: the information I am giving should be accurate, but it is best to verify it with a tax professional. I am only a mere real estate agent, and therefore, mortal.