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The last few months have seen an increase in home sales to first time homebuyers, as well as a slight improvement in the real estate market as a whole. A lot of people feel that this is largely due to the first time homebuyer tax credit that the Obama administration passed earlier this year. The measure, which was passed as a part of February’s stimulus package, gives first time homebuyers tax credits of up to $8000 when they buy their first home. It certainly is an attractive offer if you’re looking for a home anyway – and we have several friends that have bought homes this summer because it was such a great deal.

A couple of weeks ago I wrote about how the time that was available to take advantage of the tax credit was quickly running out. The credit is only applicable to home purchases that have been completed by December 1st, and since most home closings can take anywhere from 30-60 days, if you haven’t already put in a purchase agreement on a house by now, you may be out of luck!

For a lot of people that is going to come as a big shock and a disappointment, but all hope is not gone! Congress is already talking about extending the program, and possibly expanding it to all homeowners and increasing the credit to $15,000. It is far from a done deal, but it is currently being debated by our legislators.

the National Association of Realtors wants to expand the tax credit to $15,000, and it wants to allow all buyers to be able to qualify, not just those who have been out of the market for three years, according to The New York Times. The $15,000 figure is actually the amount that the credit’s initial sponsor in Congress, Sen. Johnny Isakson, R-Ga., a former real estate agent, had wanted. Now Isakson is introducing a bill that would provide up to a $15,000 tax credit to any buyer who stays in their newly purchased home for a minimum of two years, according to the Times.

So Congress currently has bills that are being put forward that would extend the tax credit, increase it to $15,000 and allow all homebuyers (not just new homebuyers) to take advantage of the credit. Whether this bill will pass is another matter. It is currently up for debate, and the president is debating whether continuing it would be a good plan.

Asked about whether the Obama administration would consider extending the credit, White House spokesman Robert Gibbs said the administration’s economic team was evaluating the impact on new home sales and would make a recommendation to the president, according to the Associated Press. The tax credit has been expensive, but it has arguably been successful in helping the ailing real estate and construction industries survive in recent months. However, like other supposedly temporary tax credits, the First-Time Homebuyer Tax Credit may end up being called the Perennial Homebuyer Tax Credit.

One of the biggest problems the bill faces is the price tag. Estimates say that it could cost anywhere from $50 billion to $100 billion dollars. Whether that is worth it right now is debatable.

Only time will tell if Washington will decide to continue the program. If they do I can already hear all of the people complaining that they “only got $8,000”, or from others who want this credit to become permanent – not just a one-time deal.

UPDATE: New First Time Homebuyer Tax Credit Bill Extension Introduced

A bill introduced last night after I wrote this post would now extend the tax credit for another 6 months, while not changing the the amount of the credit, or who is qualified to receive the credit. From housingwire.com:

A senate bill introduced late Thursday would extend the $8,000 first-time homebuyer tax credit for six months after its current November 30 expiration date. Maryland Democrat Sen. Benjamin Cardin introduced S.B. 1678, and it is co-sponsored by senators John Ensign (R-Nev.), Johnny Isakson (R-Ga.), Senate majority leader Harry Reid (D-Nev.) and Debbie Stabenow (D-Migh.)… The bill would not change anything on the tax credit except its expiration date, although at least one housing industry group is calling for an expansion of the credit and another, the National Association of Realtors (NAR), has urged an extension of the tax credit.

So if this were to particular bill were to pass, the tax credit would be extended, but not increased or changed to include all homebuyers.

UPDATE: 11/5/2009

Bill passed by Senate and House to extend the $8000 tax credit. Now only needs to be signed by the president. Extends the bill to include a $6500 current owner homebuyer tax credit.

What do you think? Should the tax credit for homebuyers be increased to $15,000 and be expanded to all homebuyers? Will the effect it has on our economy be worth it, or will it just be another over-reaching expenditure of taxpayer money? Would you rather they just extend the current program? Let us know your thoughts in the comments!