Should the Homebuyer Credit be Renewed?

(CBS)  Even on a rainy day, 7-year-old Bella Segal is trying to help sell her house.

"I was thinking that we could sell lemonade to get people to come to the house to see the house," Bella said.

Lemonade and cookie: 50 cents. And for $575,000 she's throw in a free house. The Segals are moving to St. Louis for a better job, reports CBS News correspondent Karen Brown. But their house in New York's Westchester County has been on the market for three months, and so far, not even a nibble.

"We know that we have to patient and carry our mortgage for as long as we can," said Michelle Segal. "We are hurting emotionally and financially, we are losing a lot."

The Segal's house is considered a move-up home. That market, which is two-thirds of all homebuyers, is still in a slump.

"There is a big problem in the middle part of the market," said Jordan Goodman with MoneyAnswers.com.

To solve that, legislators are considering a new tax credit similar to the $8,000 credit for first-time purchases. That helped bring 1.4 million buyers to the table, and stabilized the market.

The new proposal would extend the first-time credit through the summer of 2010, open it up to all buyers, and over up to $15,000. But it's expensive.

"We're talking real money,$75, $80, $85 billion, and I think at that point, we're stretching the limit of what we can do," said Mark Zandi, a chief economist with Moody's Investors Service.

By the time the first homebuyers credit expires on Nov. 30, the government will have spent $15 billion.

"They're spending hundreds of billions on all kinds of things," Goodman said. "It's a pretty targeted area that's actually helping the housing market and helping the economy."

First timers like Moto Tohda are racing to take advantage of the current program before the deadline.

"Eight thousand is a lot of money," Tohda said.

But the majority of sellers are still waiting.

"It's sad that we haven't sold it yet," Bella said.

And economists say without another tax credit, it'll take more than a lemonade stand to get the real estate market moving again.

[JABRONIE34]

YES!!
Folks, the middle class is still struggling with job loss and many of us have been forced to borrow money from IRA's and 401k. The tax credit will help many of us who qualify for a home loan -- Relieve some of the financial stress for the earned income (10percent)we now owe the government for taking early (premature withdraws...Lets keep this going!!!!!

[payasyougo]

"Should the Homebuyer Credit be Renewed?"
----
- it is important to the economy that realtors and mortgage brokers, two groups that benefited significantly during the housing bubble by helping average folks into houses they cannot afford, not go hungry.

[dpnstl2]

This week the IRS announced that 1.4 million families had taken advantage of the first-time home buyer credit. They issued some last minute guidelines and even a video to help homebuyers understand the credit and how to claim it. I wrote about it and included the IRS video this week in a post at
http://realestateconsumernews.com/home-buyers/first-time-homebuyer-credit-provides-tax-benefits-to-1-4-million-familes-to-date-according-to-the-irs/

[culturechang]

We need to keep the inflated housing market inflated at all costs.

[Razzl]

One wants to feel sorry for this family, but the same question pops up over and over: does nobody understand how few buyers in any American market can afford a house in that price range? Probably fewer than 3% of the active buyers on the market can afford that $575k house, so the chances of it selling this year or next are slim to none. And there are some markets, including suburban NYC and New Jersey, where the people are hoodwinked by the real estate industry into believing that housing prices will always be way beyond the national median, therefore everyone should overextend themselves or be shut out forever. Well, it turns out not to be true, and the lesson everyone should take from this downturn is that you don't buy homes in those price ranges unless you can really afford it and don't have to worry about losing equity when it comes time to sell. Otherwise, people should be buying within their means (35-45% of gross monthly income) or else move further out until the prices come to meet you. There's no place, not LA or Vegas or Miami or NYC, that's so special that the whole world always wants to live there at any price, so don't let yourself be harassed by the market into overpaying...

[bubbadubba]

Brilliant idea and great story!
I am sure $575,000 puts that home in the "first buyer" range.
Then after talking about a house that costs over half a million dollars comes the punch line from a first time buyer " $8,000 is a lot of money "!
LOL

[nojoy01]

While we're at it, let's extend the other program that was actually helping people, the economy, and the environment. That being the "cash for clunkers" program. Never happen, makes too much sense.

[nojoy01]

Hey! I know how to pass this bill AND make it "revenue neutral". If it costs us 75 or 80 billion then we can order the treasury dept to print up another 75 or 80 billion.

Gee, with my insight on how to pay for programs I ought to run for congress. I'd fit right in with the people there now.

[brady51h-2009]

Folks it's time to stop spending money that we don't have. It's also time to put a National Debt tote board on the walls of both houses of Congress so these Congressmen and woman can have a constant reminder of the hole this Country is in. It's time to say NO.

[Orlandojon]

Should the Homebuyer Credit be Renewed?
NO! Stop subsidizing one group with the tax money of another. Redistribution of wealth is just a fancy word for robbery

[retiredgustav]

The republicons have been robbing working people for years, it our turn now.

[JTOlivar]

NO, the home subsidy down payment just encourages lazy Americans that won't work and save their money for a down payment! It is not my job to hand every lazy individual in the United States a home they can't afford to keep up in the first place, much less make the payments on it.

It's WORSE than the stupid Cash for Clunkers program!