My most widely read post ever, by far, was last July when I noted the passage of the 2008 Housing Bill that contained assistance for first time home buyers.
Are those first time home buyers paying careful attention to this stimulus bill, too? It looked for a while like Congress might enact a temporary $15,000 credit for all home buyers below certain income limits: the Senate had favored such a plan. Now, it turns out, the negotiated bill that will soon be voted on by both chambers (and in all likelihood will be passed and signed by the president) contains generous assistance for first time home buyers. The maximum credit is $8,000, not far off from the $7,500 credit currently in place via the 2008 Housing Bill.
But the big difference from that Housing Bill, as reported in The New York Times this evening, is that this time Congress has jettisoned the requirement for the credit to be paid back over 15 years. Now it’s a true credit instead of an interest-free loan. That makes it immensely more valuable, enough so that it could actually stimulate some activity in the housing market (but not the kind of speculation that might have resulted from the Senate’s proposed $15,000 credit for all homebuyers).
The credit will only be available to buyers between January 1, 2009 and December 1, 2009, so only the more prepared first time home buyers will get to benefit. And the credit does phase out for higher income levels (above $75,000 for individuals and $150,000 for couples). But this is encouraging news for many first time home buyers who may have been sitting on the sidelines.
This time next year I’ll be thinking of creative ways to help encourage first time home buyers who bought in 2009 to put their windfall into an asset-building investment, and get a double bang for this buck.