The credit—as we've reported about extensively—was extended earlier this month. The ten percent jump is higher than analysts expected, but with hoards of buyers rushing to close in October (and probably November too), there may be a steep drop in sales in coming months.

After all, the pressure's off again.

The next deadine for the extended credit is April 30. Here's NAR's chief economist Lawrence Yun on the subject:

“Many buyers have been rushing to beat the deadline for the first-time buyer tax credit that was scheduled to expire at the end of this month, and similarly robust sales may be occurring in November,” he said. “With such a sale spike, a measurable decline should be anticipated in December and early next year before another surge in spring and early summer.”

For last week's column, I wrote about the first-time homebuyer credit and provided some tips for people interested in taking advantage of the "free money," as we wrote on our cover.

Well now, the Wall Street Journal-–bunch of copy cats!—has a similar story on their website. I think we covered most of the same bases: the new income limitations; deadlines to be mindful of; communicating with your lender.

But the WSJ has some fresh material. Anyway, here are their added tips:

• Be mindful of interest rates

Interest rates are low right now, but will likely rise next year, Ms. Warren says. Higher rates will affect your monthly mortgage payments, thus the affordability of the house you are buying.

"It's pretty universally accepted that rates will be higher next year," she says. "What is unknown is how fast and by how much."

Average rates on 30-year fixed-rate mortgages have been hovering around 5%. But when the Federal Reserve stops buying large amounts of mortgage-backed securities next year, interest rates could rise, Ms. Warren points out. The Fed plans to end its purchase program in March.

• Don't count on another extension*

*Yeah, no extra detail necessary for this one. Members of Congress have already pronounced this extension as the last.

Image by Keeping it real, Flickr Creative Commons Attribution License

More tips for homebuyers interested in using the government's $8,000 tax credit, continued from this earlier post.

• It’s not just for first-timers anymore. The tax credit needs a new name to do it justice. The National Association of Realtors is calling the newly passed version the “Extended Home Buyer Tax Credit 2009/2010.” But neither the media nor the IRS has figured out a replacement for the old terminology. Whatever they settle on, the credit now applies not just to first-time homebuyers but to a narrow group of existing homeowners who’ve lived in their current houses for five consecutive years (within the last eight). If you fall into this category and are looking for a replacement principal residence, a credit of up to $6,500 is available (up to $3,250 for a married individual filing separately).

• April 30 isn’t your only deadline—it’s the deadline that drives all other deadlines. Weichert Realtors’ Lamont Miller, who has worked with 16 first-time homebuyers since the first credit was passed, immediately gauges new clients’ needs and alerts them to their many ticking clocks. If the buyers are purchasing a short-sale property, that’s extra time, though it’s often unclear exactly how much: “I have a client that went to settlement last Friday that purchased a property in Accokeek. They put the contract on that property back in early August, and the short sale got approved during the beginning of October.” Likewise, loans from the Federal Housing Administration (FHA) require extra processing time; the property must undergo a special inspection and appraisal, which can take up to 45 days, if a serious problem is discovered (example: the roof needs to be replaced). Some prospective buyers may want to buy a foreclosure property through the Neighborhood Stabilization Program (NSP), a wide-ranging initiative of the U.S. Department of Housing and Community Development that focuses on revitalizing neighborhoods overwhelmed by vacancies and foreclosures. That can also mean additional time-related complications. “For the NSP program you’ve got to take a course, and then you’ve got to get a lender who’s going to work with [the program],” says Miller. That can take up to 60 days. One aspect of the NSP involves grants to homebuyers, provided in the form of another tax credit—something Miller calls “a double whammie” for people simultaneously taking advantage of the first-time homebuyer credit. The grants are administered by local jurisdictions. In D.C. the Department of Housing and Community Development handles them; in Prince George’s County, the Redevelopment Authority manages the program.

• The housing market’s less chaotic than it was before, but it is busy again. If you jumped into the boiling, boom-time market and decided “Whoa, too much for me,” you’ll be stepping into a very different—albeit still challenging—climate. Once upon a time, buyers had to drop everything to zoom over to open houses, make offers immediately, and hope for the best. Back in 2005, Coldwell Banker agent Atul Garg recalls literally being “camped out in the office until 2 in the morning, and I’d get in at 8. It was 24/7,” he says. “You’re cramming in every weekend, offer, offer, offer. Now, because there’s more inventory, buyers are taking longer to make their decision.” Of course, if you’re a first-time homebuyer trying to obtain that credit, you don’t have that luxury anymore. “There’s actually a dollar value attached to waiting now,” says Garg. And properties aren’t sitting like they were during the early months of the recession. The number of purchases in D.C. jumped from 409 in September 2008 to 552 in September 2009, with much of the growth occurring in condo sales. If 301 condos and co-ops sold in September 2006, only 194 did in 2008. But this year, the number bounced back to 274, much closer to the frenzied mid-decade numbers.

Image by Keeping it real, Flickr Creative Commons Attribution License

In D.C., roughly one out of every 445 people filed for the credit. In the entire state of Maryland, 23,679 have filed for the credit, roughly one out of every 237 residents.  In Virginia, 40,527 have filed for the credit, roughly one out of every 191 locals. (I calculated these numbers comparing the original figures with population estimates from the Census Bureau's 2008 survey.)

The tax credit information comes from Jim Dupree, a spokesperson with the Internal Revenue Service. (I've blogged about the homebuyer credit frequently in the last few weeks as the newest version of the popular credit was making its way through Congress.)

So 1,329—not terribly impressive?

I wouldn't say that.

First, there are a few points of explanation and caveats to note:

These figures include people that applied for 2008's first-time homebuyer tax credit for up to $ 7,500, in addition to the people filing for the  $8,000 credit, which arrived later on.

The numbers also only take into account people that filed for their credit on or before August 22 of this year.  And there are, presumably, plenty of people who bought houses in anticipation of filing for the credit with their 2009 tax documents, due next April. You can apply for a reimbursement immediately—but you don't need to.

So these numbers are, well, only indicative of the scale of the credit's impact in each area's market.

Also, naturally, Maryland and Virginia are going to see more first-time homebuyers combing through their foreclosure-ravaged communities. Home values in D.C. have barely dropped in comparison to those in Prince William County and Prince George's County.

I'm writing about the first-time homebuyer credit in my column this week. I talked to one Capitol Hill agent that worked with 11 first-time homebuyers in the last few months; eight have been in D.C.    Of his clientele, most are "nonprofit folks, government employees," looking for houses priced at $250,000 and below.

Think about which neighborhoods in D.C. will meet his clients' criteria. Not many.

Okay, in truth, the following list should read Real World, Real World, Affordable Condos, Real World, Real World, First-time Homebuyer Tax Credit, Real World, Real World, Real World, Real World. It's an unstoppable force! as I predicted.

But in the name of variety and, well, a "housing complex," I'll leave most of the Real World posts to be discovered by Googlers and those that click on the top link. All the bios I wrote about the various roommates are collected there.

(1) Here They Are D.C., Your Seven (Eight, Actually) Strangers!

(2) D.C.’s Designated Affordable Condos Are Great—Just Don’t Move Any Time Soon

(3) Congress May Pass New Homebuyer Tax Credit This Week

(4) Homebuyer Tax Credit Will Extend Through July

(5) First-Time Homebuyer Credit Will Be Extended…But How?

(6) Now That’s What I Call a Sidewalk!

Image from MTV

The National Association of Realtors has posted a Q&A about the credit, which is altered significantly in this bill, on its website. Their responses should answer all the basic questions:

Who Qualifies for the Extended Credit?

• First-time home buyers who purchase homes between November 6, 2009 and April 30, 2010.
• Current home owners purchasing a home between November 6, 2009 and April 30, 2010, who have used the home being sold or vacated as a principal residence for five consecutive years within the last eight.

To qualify as a “first-time home buyer” the purchaser or his/her spouse may not have owned a residence during the three years prior to the purchase. If you or your client purchased a home between January 1, 2009 and the date the bill is signed by President Obama, please see: 2009 First-Time Home Buyer Tax Credit.

Which Properties Are Eligible?

The Extended Home Buyer Tax Credit may be applied to primary residences, including: single-family homes, condos, townhomes, and co-ops.

How Much Is Available?

The maximum allowable credit for first-time home buyers is $8,000. The maximum allowable credit for current homeowners is $6,500.

How is a Buyer's Credit Amount Determined?

Each home buyer’s tax credit is determined by tow additional factors:The price of the home and the buyer's income. Under the Extended Home Buyer Tax Credit, credit may only be awarded on homes purchased for $800,000 or less. Under the Extended Home Buyer Tax Credit, which is effective on November 6, 2009, single buyers with incomes up to $125,000 and married couples with incomes up to $225,000—may receive the maximum tax credit. These income limits have changed from the 2009 First-Time Home Buyer Tax Credit limits. If you or your client purchased a home between January 1, 2009 and November 5, 2009, please see 2009 First-Time Home Buyer Tax Credit.

If the Buyer(s)’ Income Exceeds These Limits, Can He/She Still Get a Credit?

Yes, some buyers may still be eligible for the credit. The credit decreases for buyers who earn between $125,000 and $145,000 for single buyers and between $225,000 and $245,000 for home buyers filing jointly. The amount of the tax credit decreases as his/her income approaches the maximum limit. Home buyers earning more than the maximum qualifying income—over $145,000 for singles and over $245,000 for couples are not eligible for the credit.

Can a Buyer Still Qualify If He/She Closes After April 30, 2010?

Under the Extended Home Buyer Tax Credit, as long as a written binding contract to purchase is in effect on April 30, 2010, the purchaser will have until July 1, 2010 to close.

The original credit was set to expire on Nov. 30. Last week, we learned that the new version of the credit will extend to some current homeowners looking for their next purchase, and that it would apply to all contracts entered by the end of April, and closing before July 1 (via Wall Street Journal).

The proof is in the page-views: This brief little item I recently posted on the credit is the most popular post in the last month. Google delivered thousands of readers to my little online doorstep. The second place winner–"Florida Avenue Grilling," an article I worked on for weeks—drew half the viewers. Sigh.  So it goes.

You people want first-time homebuyer tax credit news, here you go! On Tuesday, Connecticut Senator Chris Dodd announced that his renewal plan had enough backing in the Senate to pass. But he refused to disclose details about the new agreement, according to Reuters.

Cut to yesterday, and the Wall Street Journal fleshes out the story:

• "The agreement would extend the existing credit for first-time home buyers, worth up to $8,000, while offering a new credit of up to $6,500 for some existing homeowners."

• "The credit would be extended from its current expiration date of Dec. 1 to all contracts entered into by April 30, and closed before July 1."

• "It is expected that income limits on people claiming the credit would be increased to $125,000 for singles and $250,000 for couples, from the current $75,000 and $150,000, aides said. The credit phases out for people making more than those amounts."

Also, Reuters reported that the extension will be "final"—no extensions on extensions.

For months, the real estate industry has eagerly awaited news on whether the first-time homebuyer tax credit (for up to $8,000) would be extended past its original deadline of Nov. 30.

Yesterday, they sort of got an answer.

"We have that. Done," Senator Chris Dodd told reporters. But there was no official word on how long the benefit would last. Or whether second-time, third-time, etc. buyers would now be able to use the credit. Or whether the income restrictions would change.  (All this according to Reuters.)

Back in September, when the credit's future was uncertain, buyers rushed to purchase new homes and make sure they used the credit while it was still around.

That month, sales of used ("existing") homes increased 9.4 percent, after a dissapointing and unexpected sales drop off in August, according to economist Patrick Newport of IHS Global Insight. But in his latest report, Newport forewarned that unless the tax credit "is both extended and expanded, sales will take a hit, and house prices, which have stabilized recently, will start falling again."

This past weekend, the Washington Post did an excellent job envisioning a nightmare scenario: Searching, finding, going under contract and closing on a house by November 30.

Why the rush? The $8,000 first-time homebuyer tax credit is scheduled to expire by then.

But with people scrambling, White House spokesperson Robert Gibbs said today that the president's  economic team is evaluating the credit's impact, and will soon advise him about whether to propose an extension.

Image from Wikimedia Commons by Pete Souza