Greg's Corner

The outlook for U.S. real estate

By Kenneth R. Harney
Realty Times

Realtors, home builders and consumers hoping not just for an extension of the $8,000 tax credit, but an expansion to all buyers in 2010, shouldn’t hold their breath.

That’s because it’s looking more likely that Congress will only agree to a continuation of the current credit beyond its scheduled November 30 termination date.

But that’s not bad news. Just a few weeks back the key question was: will Congress extend the credit at all? Now that looks like a pretty safe bet.

When it comes to tax issues, you’ve got to follow what New York Congressman Charlie Rangel is saying. He’s the chairman of the Ways and Means committee, and no tax legislation has even a chance of getting anywhere without his say-so.

On the other hand, bills he supports, they just about always make it at least to the House floor, and usually beyond.

Here’s what Rangel told reporters last week about the housing tax credit: “There’s no question I think it should be extended,” he said. How long, I haven’t discussed.” Rangel also said he doesn’t thing that “eligibility should be expanded beyond the first-time home buyers,” according to Dow Jones Newswires.

That’s probably the kiss of death for lobbyists pushing for an increase in the maximum credit to $15,000, and expansion of coverage to nearly all buyers of homes in 2010, and an increase in the income limits for eligible purchasers.

The National Association of Realtors and the National Association of Home Builders have been the most outspoken advocates of a year long extension and expansion of the credit, up to a maximum $15,000.

Informed of Rangel’s comments, home builders president Jerry Howard said he’s no longer as “optimistic about expansion” as he once was.

But, on the other hand, chairman Rangel’s endorsement of an extension of the credit — for a yet-to-be specified period of months — has got be a lifesaver for thousands of buyers who’ve been worried they’d miss out on this year’s credit because they can’t close their transactions by November 30.

The politics of the tax credit, and the likely rejection of a bigger credit, are all about the budget deficit. Lawmakers on both sides of the aisle are looking for ways to cover the multi-billion-dollar revenue costs of an extension of the credit. Some estimates go as high as $15 billion.

One idea advanced by Georgia Republican Sen. Johnny Isakson: tap into some of the unspent economic stimulus bill money still sitting in the $800 billion economic stimulus bill.