(Reuters) – The Senate voted on Wednesday to give home buyers another three months to settle on their contracts and take advantage of a popular tax credit that sparked a rush of activity in the housing market.

The Senate, with a vote of 60-37, accepted an amendment by Democratic Leader Harry Reid that extends the closing deadline to September 30 for buyers who met the April 30 deadline to have a signed contract.
The current deadline requires buyers to close by June 30 to get the $8,000 tax credit for first-time home buyers. Existing homeowners buying a new primary residence are eligible for a $6,500 credit.

Reid offered the measure as an amendment to a bill that would extend some popular business tax breaks and extend unemployment insurance benefits for jobless workers.

The proposal would not have a significant impact on future home sales as the extension would be only for home buyers who already had a contract in hand by April 30.

The popularity of the tax credit has caused some anxiety because settlement offices are inundated with buyers trying to close on transactions by the end of this month to get the tax break.

As a Buffalo Grove Realtor out of Coldwell Banker, I can help buyers and sellers with Homes in Buffalo Grove. If you need a real estate expert, look no further. The Sharron Kelley Team can help you with all of your Buffalo Grove Real Estate needs. Contact me, Sharron Kelley at 847-465-3638 or email me at Sharron@NorthernIllinoisHomes.com. Visit my website www.NorthernIllinoisHomes.com for all of your real estate needs.

Well we find ourselves 5 days from April 30, 2010. It was not long ago that we were near the deadline for the first time buyer tax credit of November 2009. There is a new extension for military and those serving overseas. Do you think we will see another extension for the general public? Will the economy be better if we do get the extension?

I DO NOT believe they will extend again and here are 3 good reasons:

1. Cry Wolf Syndrome – The US Government and President Obama already extended the deadline once. The current extension will end at the end of April. “The Boy Who Cried Wolf”, one of Aesop’s Stories can shed light on the outcome if the extension was extended again. “Wolf, Wolf” could be translated today to “Deadline, Deadline”. If the Government extends it AGAIN the buying public will no longer believe there is a true deadline and it could have a negative impact on the positive upswing the National Real Estate Market has seen with sales in the last 3 months.

2. Economy’s Running Cycle – With the economy we have used the band-aid approach up to this point and we have tried to soothe the aching economy. But at this point we must allow it to run its course. The economy is cyclical and at this point we must let it “run”. Many of my contemporaries have stated that “the economy has recovered and so has the Real Estate market!” I do not know if I hold the same enthusiasm or insight.

3. Interest Rates are KING - I don’t believe the TAX CREDIT ultimately shapes the entire Real Estate market. I have seen it engage first time buyers and buyers that could not move without it. Interest Rates and Sales Prices are typically an inverse relationship. The lower the interest rates, the higher the sales prices and vice versa. When interest rates increase it dramatically affects buying power and ultimately the seller’s bottom line. There are many people buying homes and refinancing right now because rates are SO LOW. That will not change when the credit goes away.

So where does that leave us in the current economy and reviewing the Real Estate Market?

The tax credit and move-up/down buyer credit is a great tool that you should use if you are already looking for a home. It should NOT be the main basis for your decision to purchase a home.

I do believe the interest rates will increase in 2011 so if you are thinking about purchasing you may want to do it while interest rates are low and you have a higher buying power.

With all markets it can be cyclical. The true winners in any industry/investment are those that can control when they buy and when they sell. For more information on timing, rates and the best investments contact Sharron Kelley at Coldwell Banker 847-465-3638 or email me at Sharron@northernillinoishomes.com.

8,000 Tax Credit: 6 Days and Counting- How will this effect Homes for Sale in Buffalo Grove and Vernon Hills? 

Written by James Nellis and Edited by Sharron Kelley

If you are looking to buy or sell a Buffalo Grove home, visit our website NorthernIllinoisHomes.com. You can view all of the current Buffalo Grove Homes on the market in your neighborhood and the surrounding subdivisions.

I have posted information several times on the bill however the tax credit will only apply to purchases prior to April 30, 2010 and it is my belief that it will not be extended after that. My reasoning is this, we are going through the holiday season and winter months. That is usually the slowest time of the year, and since our economy is not great the government is trying to keep real estate sales going.

TAX CREDIT UPDATE: The U.S. Senate and House have passed the bill that includes an extension and expansion of the home buyer tax credit. It now moves to President Obama for signature, which could happen as early as tomorrow.

Home Buyer Tax Credit Changes [PDF]

Frequently Asked Questions

Lawmakers in Washington also added a $6,500 tax credit for other
primary-home purchasers and raised the qualifying income limits to $125,000
for single taxpayers and $225,000 for joint taxpayers, housing-industry
sources said.

Under the Senate panel compromise, buyers must have sales agreements in hand
by April 30, but they will have until June 30 to go to settlement, the
sources said. The measure still faces votes in the full Senate and the
House.