The home buyer credit, extended and expanded over the last 3 years is set to expire at the end of this month with Congress still unable to approve the extension as part of HR 4213. However, recently released data for May 2010 shows worrying trends of sharply declining sales of existing and new homes. Further, inventory data and foreclosure activity have not shown any signs of improvement. All this suggests that the expiration of the home buyer credit may have more of an impact than people thought.
This has prompted Congress to take more action with the stalling of the HR 4123 bill in Congress, due to other provisions. As such 2 new bills have been introduced to try and extend the home buyer credit and also unemployment insurance – 2 key bills that Congress is likely to approve given their importance to their constituents. These bills are:
[APPROVED] H.R. 5623 – Homebuyers Assistance and Improvement Act of 2010. Among other items, this bill would extend the homebuyer tax credit of up to $8,000 for the purchase of a principal residence before October 1, 2010. The current benefits apply to cover buyers who enter into contracts before April 30 and close by June 30. This bill would extend the closing date to September 30, 2010.
The bill would provide any home buyer who entered into a contract on a home by April 30, 2010, but has been unable to go to closing within the required 60 days, an additional 90 days to close and qualify for the credit. This provision is estimated to cost $140 million
[Update on voting] The bill passed 409-5. It now goes to the Senate, where Senate Majority Leader Harry Reid, D-Nev., has sponsored a similar measure. The popular tax credit has helped to stabilize the nation’s slumping housing market. More than 2.6 million taxpayers claimed the tax credit through April — claiming $18.7 billion — according to the Internal Revenue Service.
The bill has now passed in the Senate without amendment by unanimous consent. It now goes to the President, who is expected to sign the bill into law in the next few days. See this post for more details.
[Senate to Vote] H.R. 5618 Restoration of Emergency Unemployment Compensation Act. This bill would provide an extension of unemployment insurance through November 2010, including 100 percent of the federal funding for the extended benefit program. The provision would preserve the 99 weeks of state and federal unemployment benefits. The bill will be declared as emergency spending and add $34 billion to the deficit. This bill does not extend the payment of the $25 per week additional payment that was provided in the “stimulus.”
The approval of these bills would be great news for many home buyers who signed a purchase agreement/contract prior to April 30th but are having difficulty closing before June 30th. and for the millions of unemployed who are set to lose their unemployment and insurance benefits at month end.
[Update on voting] After failing to pass an extension of unemployment benefits earlier this week, the House tried again — and succeeded, 270 to 153. The Senate will take up its version of the bill when Congress returns from a week-long break, on July 12. By the time the Senate acts, approximately 2.5 million people will have stopped getting unemployment checks.
Republicans still oppose the bill because it’s costs, approximately $34 billion, were not offset with new revenue. Since the financial crisis of 2008, Congress has routinely passed unemployment insurance extension bills without offsets because benefit payments to help the unemployed are considered “emergency spending” and are not subject to pay-as-you-go rules.