Home buyers take advantage of tax credit

September 10, 2009 6:27:11 PM PDT
First-time home buyers are racing against the clock to close escrow before a big federal incentive expires that gives them a huge break.

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Bay Area home sales are at a four year high, thanks to low prices and an $8,000 federal tax credit for first-time home buyers.

"That piece right there is driving about 40 percent of new first time home buyers. They said in a survey that they would not have bought if they did not have the $8,000 credit," said Association of Realtors President Quincey Virgilio.

Craig Krstolic says the tax credit is a key factor in his house hunting. He says it will allow him to realize the American dream and stimulate the economy.

"If I can get into a home and become healthier financially and grow financially that money goes back into the local town, back to the schools back to the state," said Krstolic.

To take advantage of the tax credit, buyers must close their home deal, not just be in escrow, no later than November 30th. Agents say in today's complex lending world, closing a home sale can take 45 to 60 days.

"Review appraisals are very common nowadays. So it's not just one appraisal any more, the banks are requiring several appraisals," said

With the clock ticking on the tax credit, many industry groups are pushing for an extension of the tax credit and even an expansion of the credit to allow any homebuyer to qualify.

Steven Levy with the Center for Continuing Study of the California Economy thinks the tax credit is good policy and will have widespread support.

"The economy is doing better but the resale housing market is still very vulnerable to foreclosures and can use all the help from buyers it can get," said Levy.

Bills are pending in Congress to extend the tax credit another year but with several high profile issues being debated, congressional action could be delayed.

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