Will the first time home buyer credit be renewed…or even better…extended?

THAT is the question…..

As all of you know…the ‘first time home buyer’s’ credit was a huge boost to housing.

We can argue the long term benefits or detriments of these sorts of government handouts later…..we have heard from HREU Coaching Student from all over the US how crucial a continuation of this program is for any sort of meaningful long term housing recovery. At this point everyone knows that the economy goes where housing flows. Homes sell…fewer foreclosures….eventual leveling off of home values…and then a return to a stable market.

Here’s the tough part, there is no guarantee that there will be an extension of this program. We reported on this blog yesterday that there may be movement away from this program towards others by the Obama Administration.

Here’s a new video from CNBC Rock-Star Diana Olick. If you have yet to discover Diana…check her out. No question that she is the best reporter about all things housing. She cuts through the fluff and gives you the bottom line:

More from Diana….

I have to say I was a bit surprised at the crafting of HUD Secretary Shaun Donovan’s statement before the Senate Banking Committee today, specifically with regards to the first time home buyer tax credit. Donovan followed testimony from Sen. Johnny Isakson (R-GA), who is pushing for not only and extension of the credit through the first half of 2010, but an expansion to all home buyers with joint annual income up to $300,000.

In case you didn’t know it..Sen. Johnny Isakson’s family is in the real estate business! They own a very large, successful real estate brokerage.

Isakson told fellow Senators that without such an expansion, “We will have a dramatic and awful situation in the US from which recovery will be more difficult than what we’ve experienced already.”

Yep, we agree. Here’s the rub. Many believe that the folks who would be ‘stimulated’ by the $8,000 stimulus…have already purchased. Additionally, the next wave of foreclosures are with more expensive homes….not the sort of homes first timers would want/ could afford.

Going into the hearing, we already knew that the Obama Administration had yet to take a stand publicly on an extension of the credit, which turns into a pumpkin Nov. 30th. A few weeks ago, during a conference call on the government’s loan modification program, I asked a “Senior Administration Official” about the credit, and he responded, “There are a lot of ideas out there for what to do with the extension of the home buyer credit, and other credits, and those issues are not yet finalized from our perspective internally.” At the time I called that a “punt.” Your safest play.

HUD Secretary Donovan, in his opening statement, said:

I am also aware of the strong support in Congress for doing more to support the housing market, including extending the First Time Home Buyer Tax Credit beyond 2009. At the same time, I am mindful that these proposals can be very expensive, especially at a time of significant budget deficits. I can assure you the Administration will work with Congress to fashion appropriate and effective home buyer incentives, mindful of both their benefits to stimulating new demand and their costs to the American taxpayer.

THAT comment makes me nervous. If these guys were going to back the continuation of this program wouldn’t they be shouting from the tops of the tallest (unsold, vacant) buildings? Doesn’t it make sense that if you really want to juice up housing you need to continue the momentum that has already started….Come on Mr. HUD Secretary….you aren’t really going to drain the fuel from the tank just as we are getting rolling are you?

And it seems that I am not alone in my concerns about the lack of clarification….

I don’t know about you, but that sounded more like a “No” to me than a “Yes.” When pushed, by the never-timid and always blunt Sen. Jim Bunning (R-KY) on why the Administration needed more time to study the costs, Sec. Donovan continued to say they would have an answer one way or another in a few weeks.

I think it’s one thing to answer a question by saying we’re considering our options and weighing the costs, and another thing entirely to cite budget deficits and the expense to taxpayers, twice, in a prepared statement. Just my rumination

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