The $8000 federal tax credit which has given the housing industry a boost in the last eight months is being extended.
It should be written into law by the end of today – November 6th 2009.
What does this mean to buyers and sellers in Austin?
In a nutshell the changes for first time buyers:
- You must be over 18 years old
- You can still claim on 2008 tax return if you close by the end of 2009
- The income limits have increased to $125,000 if individual claiming separately, $250,000 if married filing jointly
- House price must be under $800,000
There is also a move-up component for people to claim up to $6500 dollars if:
- They’re buying a new primary principle residence
- They lived in the old primary principle residence for five consequetive years of the last eight before they buy the new one
- They meet all other criteria for first time home buyers
So what does the extended tax credit mean for home buyers in Austin?
8262 single family homes have sold in the City of Austin so far this year under $800,000. 271 have sold over that price. So most of the current Austin market (over 96%) are elligible homes.
Low interest rates and the extended tax credit may raise home prices at the lower end of the market.
In some areas in East Austin, I’ve already seen a swing from a buyer’s market to a strong seller’s market based on the number of homes under offer. As a listing agent I’ve seen multiple offers in almost 50% of my listings on well-staged homes under $200k in the last two months.
So buyers should expect competition for homes.
What does the move-up tax credit mean for home sellers in Austin?
If the extension brings more buyers into the market, that’s good news for sellers!
There is now more incentive for first time home sellers who’ve lived for more than five years in their home. They’re going to see more motivated first time home buyers (looking for $8000). And they’re also going to get up to $6500 on the purchase of their next home (up to $800,000 – which is most of the Austin market right now)
So the effects may ripple up to the second time home buyers market, and further up the price range.
Long time homeowners looking to downsize will now get some incentive on the purchase of their next home.
It’s going to be an interesting ride for Austin real estate. If the current extension is the final extension, things may be much quieter in the middle of 2010.