On Friday November 6th it was announced that President Obama and Congress passed new legislation that extends the First-Time Home Buyer Tax Credit of up to $8,000 through April 30th of 2010.  The new legislation also expands the credit to grant a $6,500 credit to current home owners purchasing a new or existing home.  This is no doubt great news, and it’ll be interesting to see how this affects our local market.

The 2009 First Time Homebuyers Tax Credit has received a lot of recognition nationally, and even statewide in Massachusetts for spurring home buyers to get off the sidelines where many had retreated following the banking crises of last October.  NAR (The National Association of Realtors) estimates that the current tax credit has contributed $22 billion to the economy, and approximately 2 million people will take advantage of the tax credit this year.  While there's no denying the effectiveness of the 2009 credit, the effect on our local market was not nearly as significant due to income level restrictions of $75,000 (single filer) and $150,000 (joint filers).  In our local market where the average home prices range from approximately $500,000 in some surrounding towns to upwards of $1.1 million in Wellesley, this left many homebuyers phased out.

So what effect if any will the new legislation have on our local housing market?  There are two very important details to be aware of in the new bill.  One is that the income level has been raised from $75,000 to $125,000 for single buyers and from $150,000 to $225,000 for married couples.  While there is now a cap of $800,000 on the purchase price where there previously had not been, this should still open the door to many more potential buyers in our market.  The second new incentive in the agreement would allow current homeowners to claim up to $6,500 as long as the property they are vacating has been their primary residence for at least five years.  This is significant because it incorporates a large, entirely new profile of buyer, and for those who bought at the height of the market back in 2004 and 2005 and have seen the value of their home decline as the size of their family has grown (I'm speaking from experience here) it provides an incentive as well as some breathing room that could soften the blow of the declined property values.

For people who have been weighing the idea of purchasing a first home or moving from an existing home, now is a great opportunity to take advantage of low interest rates, declined property values, and a significant tax credit.  And this would be a great time to start familiarizing yourself with the local market and gaining that market knowledge.  Click here to sign up for our Free Email Alerts that will keep you informed of homes for sale that meet your search criteria.  Or contact us today at 617-894-5278.