First-time homebuyers rushing to beat the Nov. 30 expiration of the $8,000 tax credit may have more time to shop than they think.

Senators, including Banking Committee Chairman Chris Dodd, are moving to extend the credit through July 1 and apply it to all home purchasers, rather than just first-time homebuyers.

Sen. Johnny Isakson, who owned a Georgia real estate company before joining the Senate, told the committee Wednesday the housing market will likely remain depressed for five years or more if the government does not step in to change the dynamic between slow home sales, falling home values and increasing unemployment.

Isakson recommended extending and expanding the credit and increasing the income eligibility limit to $300,000 to bring more buyers into the housing market.

"If we don't do this housing tax credit, in my personal opinion, and extend it through midyear next year and take away the first-time homebuyer means test and raise the income qualification, we will have a dramatic and awful situation in the United States of America from which recovery is going to be even more difficult than we've experienced already," he testified.

Dodd wants to stimulate the "move up" portion of the housing market, namely people upgrading from one home to a more expensive one, instead of just the first-time sector. With first-timers, he said, "You're living on a futon in a...bare bones deal, because you -- you got that house...and you're trying to make ends meet," Dodd said. "It's that move-up marketm, where you start to get what I call sort of a ripple effect, that is always so important in housing."

The Senate had considered applying the credit to all homebuyers earlier this year, but threw out the idea because negotiators deemed it too expensive. Isakson estimated that his proposal, which he is sponsoring with Dodd, would cost the government $16.7 billion in lost revenue, but would have a multiplier effect many times that in furniture purchases and home improvement investments.

Get the new
PD toolbar!


Follow PoliticsDaily On Facebook and Twitter,
and download the new Politics Daily toolbar!