(Prudent Press Agency)--- The extension and expansion of the tax credit for home buyers that was signed into law by President Obama should help the metropolitan Chicago real estate market continue its recovery, according to Jim Merrion, regional director of the RE/MAX Northern Illinois real estate network. The credit will be especially helpful for the battered condominium market, which has experienced a dramatic reduction in activity over the last 12 months.
"In the Chicago area, condominiums are often the first type of home that people buy, especially singles and young couples," Merrion said. "Extending the $8,000 credit for first-time buyers and raising the income limits to $125,000 for singles and $225,000 for couples will broaden its impact. In order to claim the credit, a home must be under contract by the end of April and closed by the end of June. That should provide the incentive needed to get the 2010 housing market off to a strong start."
Merrion says that a new provision, offering a credit of up to $6,500 to existing homeowners who have owned their residence for at least five years, also will boost the local housing market.
"This portion of the credit will motivate those who already own a condo or other home and are interested in upgrading," he said. "Many in that situation have been watching the opportunities available in the housing market, and the tax credit will give them the added resources required to make the move they have been contemplating."
In Merrion's view, opponents of expanding the tax credit are off the mark when they contend that its effect is merely to subsidize those who would have purchased anyway and to add additional inventory to the market for existing homes.
"The first-time buyer tax credit has done a great job of getting those who have considered buying but always found other things to do with their money off the fence and into the entry-level end of the market. Now, some RE/MAX agents tell me that their market actually has a shortage of inventory suitable for entry-level buyers," he said.
"By offering the credit to existing homeowners, we should get more of that entry-level housing on the market as existing owners move up to larger homes. That beneficial impact should eventually work its way up to the higher priced segment of the housing market, where the pace of sales has declined markedly this year."
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