I disagree with Rick. I have been house searching for about 6 months and have not found "the one" just yet. So this extension is great for me - and many others. I realize it's a huge cost to the taxpayers but when people buy houses they buy paint, hire contractors, buy furniture, etc - it's a huge spark to the economy. So I like the move and think it'll help things moving in the right direction.

I think the move-up credit will do very little to stimulate the jumbo loan 400K plus housing market. Which at the current time is all but frozen and is compounded by the fact that banks are sitting on huge shadow inventories. Banks have little incentives to loan these days (with LIBOR and interbank rates so low and spreads high.. this on top of crumbling balance sheets). Home owners who have larger mortgages and a bit of equity having lived in a residence 5+ years also have little incentive to 'move up'. Closing/realtor costs and fees, timing a contingency purchase, hassle of moving, isn't normally worth such a credit. Why not just pay the points and refi to a lower rate and stay in your current home, which many such homeowners already have?

I also believe that the 6K housing credit will continue to stimulate the lower-middle and lower end spectrum of housing along with the booming FHA loan market. The lower-end market is hot due to lower capital requirements and the availability of near-prime rates even for FHA loan participants. Another mini-bubble if you ask me (well at least in SoCal).

I bought my first house this summer. The tax credit is already spent at the ACE hardware, Home Depot, Crate and Barrel, and at local reupholsterer. Between fixing the previous houseowner's stupid houseflip fubars and buying curtains that I like, I'd say that I'm pretty confident that this $8000 has gone straight from the IRS into the local economy.

We will have owned our current house five years this May. Before reading this article, I was unaware of the new credit for move-up buyers. Thanks for this info.

I hope that NO ONE feels "gypped" by the new credits. We should not be jealous of those who are offered another deal that was unavailable to us. The goal of the credit is to help the economy as a whole. Anyone who has bad feelings about this is just plain childish.

Adam,
Your defense of the credit essentially describes the entire argument against it. The point is that since the credit is going to a large number of individuals who would have bought a house without it (which seems to describe your situation entirely), why continue it? There are estimates that it is costing over $50,000 per house that would not have otherwise been purchased. Is this really the best way to stimulate the economy? I think not.

For me I just feel like I got lied to thats all. I felt that from the time the bill passed till its end date was fairly small that it was an emergency effort. The point being... if you were saving up an amount and are less than 8k from your goal point, buy before Dec 1st. This opportunity wont come again. But it did. I wasn't going to get up to my goal on my own before December, but It was worth it considering the 8k. So I bought. Now its been extended and I look at how I could have put 20% down instead of 10% and that would have made it safer, and more responsible, but I acted quickly to beat the deadline. I'm not complaining about the deal that I got, I'm complaining about being urged to act quickly when they would have been fine with me acting slowly. I didn't want it the first time, but I'd be a fool to turn down free money. I didn't want it this time either, when it makes even less sense. I still have to pay for it.

My question is that after all these changes to the program do the first people who used it still have to repay the money? Or is that considered a different program? If so feeling a bit gypped here.

All those who want to get free money from the government please raise your hand. Ah, yes, looks like a majority.

All those who want to pay the government debt with interest so that others can get free stuff from the government please raise your hand. ... um, don't all jump as once...

I think it's not a good way to get stimulus.

1. Most of the stimulus is coming not from the government, but from the borrower. Think about it - the government gives you a little money, but, with that cash, you're borrowing a lot more money.

2. By easing the credit requirement, you cause demand to increase, and prices to rise. The nominal increase is around what the tax credit will help you borrow, which is around an extra 200k.

This tax credit is great for the government. They pay you 8k. You borrow an extra 100k or more. You pay taxes, which amount to around 10k. The government is ahead around 2k.

You keep paying taxes on that overvalued property... amounting to thousands more dollars.

Then, they claim that 8k is debt and must be paid back from taxes, later. The investors get paid!

This is just neo-liberal pseudo-Keynsian pseudo-deficit spending. It's a smoke and mirrors trick to get people to accept more debt, to stimulate the economy.

I think direct spending on reparing infrastructure is more useful. We have roads to fix. It's less dramatic, but, it needs to be done, and labor is cheap today.

What would help the lower-income worker is slightly higher interest rates combined with a large infrastructure spend. It would cause the price of houses to drop, due to a reduction of demand (and speculators avoiding the market). At the same time, the price of labor would rise.

The credit doesn't always convince people to borrow more than they would anyway. In my case I was waiting for the right time to buy, had enough for a down payment, and was considering various neighborhoods. In February I was offered a mortgage for the cost of the house I eventually chose but not money for the new furnace it needed to make it livable (there is a rental unit that was unoccupied, so that possible ncome wasn't taken into account--which did keep me from borrowing more money to fix up the place). The rest of the remodelling I've paid for as I've had the money, but I really needed the stimulus money to buy that one big-ticket item that was critically needed right after I got the property. So that $8000 went to a very nice local family business, my house is warm, and I have less debt than I would have had otherwise.
The national debt isn't going to be paid off in my lifetime, and I like the services I get from the government, so I don't mind the extra cost. My kids will like those services, too, so I think it's fair that they pay for them when their time comes.

Amen to that!!!