November 11, 2009 // Franchising.com // MORRIS PLAINS, N.J., Nearly two years ago, James M. Weichert, president and founder of Weichert, Realtors, began calling upon Congress for a homebuyer tax credit that he felt would help repair the struggling national economy. Three versions later, the leader of one of the nation's largest independent real estate companies believes the current tax credit now has enough stimulus power to get the job done.
"Previous versions of the homebuyer tax credit were successful in helping put a floor on declining home prices and the economic recession as a whole, but they lacked a few key elements necessary to create a sustainable recovery," said Weichert. "Congress and the President should be commended for not only recognizing the impact the existing credit has had on our economy but for also understanding the need for even further action."
The new bill extends the existing $8,000 tax credit for first-time homebuyers until April 30, 2010. The enhanced tax credit also gives financial incentive to a larger crop of buyers by providing a $6,500 tax credit to current homeowners, who have lived in their home for five consecutive years in the past eight years, and by increasing the income limits for eligible home buyers to $125,000 for singles and $225,000 for couples.
To avoid the demand for quick closings that was created by the previous tax credit, time has also been added to allow for closing the home purchase. As long as buyers have a binding contract by April 30, they will then have through June 30, 2010 to close the transaction and be eligible for the tax credit.
In Weichert's view, the most vital component of the current bill is the expansion of the tax credit to include repeat buyers. While the tax credits that have been in effect have clearly stimulated home sales and eased price declines in the affordable, first-time buyer market, they have not had the desired "trickle-up" effect on mid- to high-priced homes.
"This new bill should help spread the recovery we are seeing at the entry-point level to the rest of the housing market. Clearly it was already a great time to purchase for first-time buyers. But this expanded credit coupled with low interest rates and affordable home prices makes it a great time to purchase now for current homeowners too. If you have been wanting to trade up or think that might be in your near future, the current market conditions really make it financially attractive to do so before April 30," said Weichert.
Weichert was also optimistic about the effectiveness the enhanced tax credit would have on the overall economy. "Housing has always been a key economic driver. It is no surprise then that as housing has begun to recover that we are also seeing a rebound on Wall Street, a decline in the job loss rate and the first quarterly increase in our gross domestic product in a year. I think the extension and expansion of the homebuyer tax credit will help keep that positive momentum going."
Weichert has nearly 18,000 sales associates in approximately 500 company-owned and franchised sales offices in key markets throughout the U.S. A family of full-service real estate and financial services companies, Weichert helps customers buy and sell both residential and commercial real estate, and streamlines the delivery of mortgages and home and title insurance. Each Weichert franchised office is independently owned and operated.