Housing Update: Harry Reid says compromise reached, vote within 24 hours; Market Mover Wednesday: Push for Extension of Homebuyers Tax Credit continues in Senate as New Home Sales drop…
UPDATE: An EXCELLENT piece in the SFChronicle by Kathleen Pender here. She interviewed Isakson about the homebuyer tax credit and the expectations on how it will work under its limited form. Definitely worth a read.
Update: 4:42pm EST: Diana Olick of CNBC reporting now that Harry Reid’s office is confirming a deal has been reached on the homebuyer’s tax credit, it will be attached to the UE extension bill and voted within 24 hours.
Diana Olick’s RealtyCheckBlog, earlier compromise report:
…sources are telling me that there may be a compromise among Senators Dodd and Lieberman and Senate Finance folks, like Baucus and his staff. Here’s how it would work, and again, this is just a source telling me this, not necessarily what will happen:
* For first time homebuyers, the income level to qualify is $75,000/150,000 (indiv/joint)
* For step up buyers the income level to qualify is $125,000/250,000.
* For step up buyers, they must have been residing in their primary residence for 5 years.
* The credit is 10% of the sales price, with a maximum of $ 7,290.
* The credit runs from Dec. 1, 2009 to April 30, 2010.
* For legitimate sales contracts as of April 30, 2010 you have 60 days to close
* There is a waiver for military.
They can’t help themselves. They must know they are cannibalizing future sales and these are all lower end homes and first time buyers who are now tapped out.
The NAR and the Senate surely cannot expect to expand this tax credit to higher incomes and high end homes as Dodd and Isakson propose without a fight over the deficit can they? IMO if they extend it as is, with a ramp down, but limited to first time buyers, it will not have much more impact as the supply of low end first time home buyers with a job is pretty damned exhausted already.
Here in the blast zone of the housing bubble, Metro Phoenix, I am pulling for a recovery in housing as much as anyone, but it is just not economically feasible or fiscally sound to add such a load to the crippling deficit for people who earn 300k to get a tax credit, and Sen Isakson should be ashamed of himself IMO.
And WTH are they doing with this, I thought they carved it OUT of the UE extension to avoid this holdup!:
But since the UE bill is not yet passed, this argument can wait!!:
There’s almost no chance the Senate will vote Wednesday on extending the popular homebuyer’s tax credit, which is set to expire at the end of next month, a key Capitol Hill source told CNBC.com.
There was hope last night that a vote on one of several versions might be voted on Wednesday but a battle over legislation extending unemployment benefits is taking priority and right now there’s “no agreement” on that issue, according to the source.The original intent was to attach the tax credit proposal as an amendment to the jobless benefits bill.
Some senators, especially Johnny Isakson (R-Ga.), have been pushing both an extension and expansion of the $8,000 credit for first-time buyers for months. Sen. Chris Dodd (D-Conn.), who chairs the Senate Housing, Banking and Urban Affairs Committee, supports that proposal, which would apply the credit to non-first-time buyers and second homes.
Isakson, who worked in the real estate industry, wants the program extended to June 30, 2010 and the current income limits raised to $150,000 for individuals and $300,000 for couples.
Senate Majority Leader Harry Reid (D-Nev.) and Senate Finance Committee Chairman Max Baucus (D-Mont.), however, have proposed an alternative to the Isakson bill, which applies only to first-time buyers and reduces the amount of the credit over a year’s time. Their plan would extend the full $8,000 credit for four months; after that it would be reduced by $2,000 every three months.
Though that proposal is deemed more palatable to Republicans, a compromise version seems almost inevitable.
“We’re hopeful we can work something out,” said the source, who downplayed the chance of a vote on any version of the housing extension this week.
The House has yet to even get that far, though legislation has already been introduced. The House would probably vote on the Senate plan….
Today following the weak new home sales data the Senate started making noises about extension/expansion of the credit again:
A measure to extend the soon-to-expire $8,000 tax credit for first time homebuyers enjoys widespread support in the U.S. Senate, the chamber’s top Democrat and top Republican both said on Wednesday.”There has been general agreement by a significant number of senators, Democrats and Republicans, to get this done,” Senate Majority Leader Harry Reid said in remarks on the Senate floor.
The chamber’s top Republican, Senator Mitch McConnell, also said that most senators support the measure. “I certainly share his view,” McConnell said….
Sales of new U.S. homes unexpectedly tumbled in September, their first drop in six months, underscoring the hazards to an economic recovery that businesses appeared to be banking on…
…A separate report from the Mortgage Bankers Association on Wednesday showed demand for mortgages has fallen for the past three weeks as buyers move to the sidelines ahead of the Nov. 30 expiration of a popular home-buyers’ tax credit…