Monday, November 16, 2009

Why is the $6500 Repeat Buyer Credit Important?

By this time, most people are aware of the extension and expansion of the $8000 first time buyer tax credit, and many even know about the new "category" of "first time buyers" who are eligible for a $6500 credit. You can read more details here.

Income limits were raised (previously $75,000 AGI for a single up to $125,000), and the new deadline is April 30 (under contract). These changes obviously made a lot of buyers very mad; those who purchased in 2009 but didn't meet the income eligibility now look like suckers (but take least you had low prices, fantastic interest rates, and likely a lot more choice in inventory than today's buyers have.) And what about those souls that purchased back in 2008 when the "credit" was just a $7500 loan? (Again, take heart...low rates, low prices, and you really did have the pick of the litter on inventory. Just look at the inventory lines on this graph of Northern Virginia Homes for Sale and compare the 2008 line to today. What good is a big credit if everything available to buy is not worth buying?)

With inventory so tight, why do we need an extension and expansion, and on top of that a new category (the so called "move up" buyer, though in reality it could just as easily be a "move down" buyer, or even just someone who wants to convert their current residence into an investment property)?

Continue reading the post here.

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