The federal government has actively tried to heal the ailing housing market since its crash, but some of the aid is about to run out.
The federal tax credit of up to $8,000 for first-time homebuyers was supposed to end Nov. 30. The program was so popular, though, that the government extended it and expanded a credit of up to $6,500 to qualified repeat homebuyers.
But time is running out:Buyers must purchase a principal residence by April 30 or sign a binding sales contract by the end of the month for a home to be purchased before June 30, if they want to take advantage of the program.
Home sales certainly have been boosted by the program.
“I hope it stays,” said Mary Bayat, a broker in Alexandria. “I think the tax credit should be extended for the year, at least.”
Data indicates, though, that most of the effect from the tax credit took place last year, said Anirban Basu, chairman and chief executive officer of Sage Policy Group, an economic consulting firm in Baltimore.
He said a potential increase in mortgage rates would be a bigger factor in the housing market than such one-time tax breaks.
The Federal Reserve on Wednesday was set to cease buying mortgage-backed securities from mortgage giants Fannie Mae and Freddie Mac, a move that had been designed partly to keep interest rates low. Still, Federal Reserve Chairman Ben Bernanke told Congress last week that low interest rates were still necessary for economic recovery.
“I think what will heal this [wound] is not so much government programs, but time,” Basu said.
