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'Good chance' Congress will vote to extend tax credit

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Business,Patrick Crowley

A Maryland congressman said there was a good chance Congress would extend, if not expand, the popular $8,000 tax credit for first-time homebuyers, now set to expire Nov. 30.

Democrat Frank Kratovil, a Realtor who represents Maryland's 1st District, sponsored one of about a dozen bills dealing with the tax credit. Kratovil spokesman Kevin Lawlor said there were so many bills calling for the tax break to be extended for another year, and even expanded to all homeowners, there was a "good chance Congress will reach a consensus and a bill will pass."

"It has broad support," Lawlor told The Examiner. "There are bills on both sides of the aisle. It looks like something will pass. What that is, we don't know right now. But there is a move to keep this tax break going because it has been popular and effective."

The bill introduced by Kratovil, which would apply to homes purchased through 2010, would expand the credit to all buyers. The current program is open only to buyers who have never owned a home or have not owned one for the past three years.

In the Senate, a plan proposed by Majority Leader Harry Reid, D-Nev., and Senate Finance Committee Chairman Max Baucus, D-Mont., would extend the tax credit through 2010 -- but without expanding eligibility. The value of the credit would remain $8,000 through March 31 but then drop by $2,000 for each of the subsequent three quarters of 2010. Proponents in the Senate are maneuvering to add the homebuyer tax credit extension to legislation to extend unemployment benefits.

Steve Meszaros, president of the Maryland Association of Realtors, said the tax credit, pushed by the Obama administration and passed by Congress in February, has had a "tremendous impact" on the District's housing market.

"It needs to be extended," Meszaros said in an interview. "And we are hopeful Congress realizes that and enacts a law that would not only extend the tax credit but broaden it to all homebuyers."

The National Association of Realtors, an industry trade group representing more than 1.2 million Realtors nationwide, said every home sold in the United States generated $63,000 in additional economic activity.

"The data on the present homebuyer tax credit show that the credit has had its intended impact: Sales have jumped in recent months to a projected 5.1 million for the year and housing inventory has been trimmed, thus stabilizing home prices noticeably," NAR First Vice President Ron Phipps told the Senate Banking, Housing and Urban Affairs Committee on Oct. 20.

"But it is a fragile recovery, and now is the time to build on home sales momentum by extending the tax credit throughout 2010 and expanding it to all homebuyers," Phipps said.

Jill Landsman, of the Northern Virginia Realtors Association, said the association was "optimistic" the tax credit would be extended because it has provided a needed boost to what was a sagging housing market struggling through the downtrodden economy.

"We've seen the biggest impact among the first-time homebuyers, those buyers purchasing homes at $450,000 or less. That's the segment of the market we've really seen move," Landsman said.

Sales in September in Northern Virginia were up 2 percent over last year, with much of the sale activity coming from first-time buyers.

"Congress recognizes the benefit of extending and even expanding the tax credit," Landsman said. "It is something that has provided a boost to the housing market and the economy in general. Now is not the time to stop, but it is the time to keep moving forward."

The Associated Press contributed to this story.

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