@nbs2: I live in Fresno, CA. Much of the increase is because prices fell especially hard (top ten in foreclosures, 15% unemployment, etc...). The neighborhoods we were looking at were $200-250k two or three years ago, $60-80k at its worst last winter, and are now going for $100-120k. Now I'm just biding my time, waiting to see what happens after the credit expires.

Some of the houses we've seen even our agent laughs at the final offer, saying "good luck getting it appraised for that!"

What's really frustrating is the drastic decrease in available inventory. Most affordable houses are tied up in 60-90 day escrows (but still listed on the MLS by their agents, mocking me), of which many will eventually fall through.

Oh great.. letting current homeowners buy a new house? That's what contributed to the LAST bubble - senior citizens buying homes as "investment properties." Too many people listening to Carlton Sheets and buying houses as their 'nest egg.' And that's exactly what would happen, too. More 'investment' properties and speculators buying up stuff they really can't afford.

@CFinWV: Same here. $500/year, and our tax people have been saying that we need to increase our withholding amount because the tax tables are a royal mess this year. Great.@Shappie:

Agreed. The government could very easily change those terms. They've thrown away billions on far less useful programs anyway.

I agree, I would love the housing market to crash another 30 to 50%. The true worth of houses today. Then I would be able to afford one on my 50k salary. It's sad when I pay 800 in rent a month for the last 3 years and I can't buy a house even though the mortgage plus taxes right now are 700 a month.

In Ohio your income taxes are not used for roads. Sigh. Go Gas tax. Atleast we have descent roads, but they are always under construction. Can't have it both ways I guess.

@jscott73: That's why I am a bit fearful of that, especially because Phoenix sucks if you're a home seller right now. At least 50% of the "sales" right now are foreclosures.

If they extend it further they need to forgive our loans, but even better would be to convert all the new ones to loans (I know, undue and unexpected hardship, but stop giving away tax money!)

@theyoungandthebetrayed: Really? Wow. If you don't mind my asking, where do you live? I was sure that bidding wars would be a thing of the past in most of the country for another two years or so. I mean, I knew that values in the DC area are creeping back up, but $20-40k nearly overnight? Recession, what recession?

Good luck on the search - it took us three years, but we ended up in a place we like with a neighborhood we love at a price that we can afford. Not rushing got us an extra 1800 sq.ft for -$60k.

@nbs2: I've been searching for a house for a year. Home prices already jumped $20k overnight with the first 8k credit. Plus, now bidding wars are back with the highest offer at least $20k over asking.

Seriously though... This is nothing but life support. The economy is on a pacemaker, ventilator, and dialysis, all powered by a 9v battery. House sales prop up a huge number of jobs in RE, home construction, retail, and helps drop inventory so more houses can come out of the shadow inventory and play. No doubt this credit carries a danger of encouraging some to overextend themselves, but in this environment the numbers should be small damage vs. the alternative of a horrid spiral.

Disclaimer: I'm selling and can tell you this is absolutely causing a black-friday hysteria at real estate offices. Well, more last month than this since the closing deadline is almost here, but it's definitely motivating people.

@fantomesq:
I just bought one for $70k. Granted if I travel about a mile in any direction I can hear the banjo music...

Look at the cash for clunkers - you couldn't give a car away right now...

Keep in mind that it does seem to affect home prices a bit but since the credit is only available to first time home buyers it does not affect the house prices that much. Most homes are being sold to investors - at least in this area. Since the investors don't qualify for the credit, the prices aren't inflated that much.

I think it is also good for business in general as I, like I think most people, will be spending at the local businesses like for new carpet, paint, appliances and possibly for solar panels and solar water heaters, etc. It does seem like there is some artificial inflation of prices at those companies.

Plus, I figure if the banks and the car companies can ask for billions upon billions, I don't have any moral problems with carving out my $8K!

@laserjobs: The article has Brookings using a different interpretation of the estimates to yield $40,000 per home. Still too much...

@chiieddy: It may be worth waiting this bill out. If Isakson and Dodd get their way, you could see that $8k. The taxpayer in me would rather you didn't, but the consumer advocate side says good luck (the two sides will be dueling at dawn).

At this point, the experts in the field of economics are not being controversial over whether or not these incentives have slowed down the negative impact of the economic slump. They all agree that they have successfully slowed down or possibly even halted the free fall. Where some of them disagree is whether or not what we have done so far has been enough and how to make sure that we result in recovery as soon as possible.

I believe that what we have done is not enough quite yet and we need to do more work, but that doesn't mean that I think the answer lies solely amongst stimulus incentives. I think those have their purpose and they are necessary, but we need to do a lot more to create jobs effectively.

Obama has already stated that once Healthcare is done he is intending to focus on job creation very heavily next. Let's hope that what he and Congress come up with is successful.

I'm just extra bitter about the homebuyers tax credit because, even though I thought it was a bad idea for a bill, I might as well take advantage of it while they're handing out money. Plus, it looked like we might qualify. Then the final version of the bill came out. And being disqualified due to a technicality is the worst way to be disqualified. Just ask that runner who was listening to her iPod and disqualified for using an electronic device. [gizmodo.com]

That has changed thanks to this $8k credit. Banks started allowing these kinds of people that I speak of to apply that 8k towards down payments and closing costs even though the actual credit has not be received yet since it is a guarantee that they will be getting regardless.

The result for me, as I am sure it was for many people, was that I was able to get my house sooner than later which is precisely what we need right now. We need more people spending now rather than later.

Bought my first 11/25/08.

According to the NAHB this would result in 383,000 additional home sales. Dividing $40 billion by 383 thousand gives $104,400 per additional home sold!

[www.nahb.org]

Over $100k to sell one additional house, it would be crazy for congress to extend the program.

I know. I'm being nitpicky :)

I love this idea. My S.O. and I were contemplating cohabitation but didn't think we were ready to do it. We'd thought about doing it anyway just to get the credit. If they're extending it, I think it'll help us next year, when we're actually ready to buy a house together.

The people buying houses today would be buying them regardless of the credit:

[www.msnbc.msn.com] [3rd paragraph]

To me, this $8K is just rewarding people who were going to buy a house soon anyway. What's actually spurring house buying today is LOWER PRICES. But policy like this just keeps the housing bubble inflated.

But it can't keep going forever, the government cannot keep throwing money at the problem and hope it goes away. Cash for clunkers was great...while it lasted. We don't need short term fixes we need long term solutions.

Eventually the economy will have to reach a point where it can stand on its own without these "incentives" and "bonus programs" because from where I sit, the government isn't fixing the economy so much as delaying the inevitable.

Married couples get tax benefits? Then what was that so-called marriage tax that Bush tried to get rid of? The entire tax system is set up against married couples from the start. Married couples are the IRS's bread and butter after all. If my wife and I were simply cohabiting without the marriage license (as many people now do), I could have taken advantage of the program.

I'm whining because it was a poorly conceived program to begin with. Much like Cash for Clunkers, which barely affected overall fuel economy, and now that it's over, everyone's sales are back in the gutter. Now we have home builders and realtors arguing that they need more taxpayer-funded incentives to keep their business up.

That would be awesome... We FINALLY found a house we like enough to buy, but I'm not sure we'll be able to close by Nov 30 to qualify for the bonus. We're hoping to, but I also don't want to rush into it.

@cabjf: You could have bought the house in your name only and qualified. You chose to buy it in both your names.

You knew the rules and made a choice. No whining please.

Why not let it expire? If it continues, it reduces the sense of urgency, because there's no deadline to close by.

Why not a new incentive? The government pays points on any home purchase for homeowners with an income up to a certain amount.

This would be a bigger long-term benefit since it would apply to lots more homebuyers. Since the buy down of points would be a lifetime benefit (lower interest rate and lower payments) it would likely have a bigger impact in reducing foreclosures than a one time $8K gift that will be quickly spent.

2 points on a $200K home is only $4K, have of the current benefit, yet 2 points would significantly reduce an interest rate and make a lot more homes a lot more affordable.

I meant qualify for the credit because of an 09 purchase.

Remember, this is a credit, not a deduction. Credits reduce your tax liability dollar for dollar; deductions reduce your income which your tax liability is based on.

The homebuyer credit is even refundable, which means that if you have a zero tax liability, you will still get the full amount of the credit if you qualify.

And with tax software nowadays, claiming the credit shouldn't be rocket science.

Also, contrary to what you may or may not have heard, you do not need to amend your 2008 return for 2009 purchases. If you qualify for 2008, just push the credit through on your 09 return. It's nearly the end of the year anyways.

Yes, please make this change...I would be forever grateful.

I whole-heartedly agree with this suggestion!!!

@Jesse: Yeah, I know that. It's the possible expansion that I am taking issue with (of course, subsidizing first time buyers is hitting taxpayers as well...)

I see your point, but married couples also get plenty of other tax benefits.

I'm still crossing my fingers that the first incarnation of the First Time Home Buyers Credit, the $7,500 in 2008, will make it the same as the current one.

Anyone that got the $7,500 in the last half of 2008 has to pay it back. The 2009, $8,000 credit does not. That really grinds my gears.

I would have waited the extra month had they announced the updated terms and whatnot.

The credit only applies to first time homebuyers, not everyone. Suppliers have in my opinion only marginal incentive to raise prices.

But hey, go ahead an extend it. Then next year when home prices finally implode from their unsustainable levels, I'll finally buy.

The fact of the matter is that the credit is 10% of the home price up to $8,000.

[www.irs.gov]

For the love of the dollar, put a stop to this nonsense.

Thanks, Uncle Sam, for giving my tax money away to other people buying their first homes while I work hard to pay for my own.

Expanding it to everybody? That would certainly be one way to get home values to rise by, say, $8k overnight. Thanks, taxpayers.