The outlook is cloudy for many home buyers racing to meet the $8,000 tax-credit deadline. (Photo: iStockphoto)
About 1.4 million home buyers have used the $8,000 first-time home buyer credit, according to the Internal Revenue Service. And from the looks from comments to this blog, there are many, many more potential home buyers out there looking to benefit from the credit. But the catch is that the credit is only available to taxpayers who've purchased a home before Dec. 1 of this year, leaving those who haven't qualified yet for the tax credit a very limited time to do so. And while there have been some signs of hope that the credit could be extended into 2010, the jury is still out on whether it actually will be.
The problem for so many house hunters is that while they would love to buy a home now to squeeze in under the tax-credit deadline, the competition is tough out there for first-time home buyers, who must compete with other newbie buyers and investors looking to take advantage of today's relatively low real estate prices. In fact, data from the National Association of Realtors shows that in August, first-time buyers made 30 percent of the home purchases in August, and the sale of distressed homes made up 31 percent of all home sales that month, NAR says.
Voicing your opinion
Many of our readers say that if they don't make the tax-credit deadline, it won't be for lack of trying. Says "Grace," one Cyberhomes reader, "I would love it if they would extend the tax credit until next year. Ive been looking for a house for two months now and have put in about five offers; none of my offers were accepted and I've offered over $20,000 above the listing price. I didn't realize how hard it was going to be to buy. I know there are a lot of investors who are paying cash for these homes or putting down 20 percent. I have money saved up for a down payment and closing costs, but I can't afford to pay cash or even put 20 percent down."
Meanwhile, several readers have written in to express exasperation at the length of time it takes to get a bank to even consider an offer on a short sale or bank-owned property. Says "T.J.," another Cyberhomes blog reader: "A high percentage of homes on the market right now are 'short sales.' The banks are overwhelmed with so many that buyers are having to wait well over six months just to get a response. I think the $8K tax credit should definitely be extended for this reason alone."
But while most of the blog readers who've written in are in favor of a tax-credit deadline, others say that instead of making homes more affordable for buyers, the credit -- and the frenzy attached with it -- are making buying a home more out of reach: "It's amazing how an $8K tax credit has made homes LESS affordable," says one Cyberhomes reader. "I'm in Palm Beach County, and at the start of the year one could buy a home in the ghetto for $35K. Now, thanks to the frenzy caused by this $8K, the same home would sell for almost $100K. How did that help the first time homebuyer?"
Readers: Are you hoping to purchase a home in time to qualify for the $8,000 tax credit for first-time home buyers? What has been your experience? —Lauren Baier Kim