FOX 5 Money: Home Buying Credit

Realtor Ingrid Myers says the $8,000 tax credit for first-time buyers has been a big motivator.

"It's a huge deal," said Myers in her Lake Ridge, Virginia office. "It makes a huge difference."

So much so that homes under $250,000 -- the price range for many new buyers -- have been tough to find. The looming expiration of the credit on November 30 had her clients scrambling to find something.

"I have a lot of people in the pipeline that, we pretty much had given up," said Myers

Now there's a bit more time to house hunt.

Following the Senate's approval, the House overwhelmingly voted to extend the program until April 30, 2010, and throw something in for current homeowners, too.

There is now a $6,500 credit for existing homeowners. They must have lived in the home for five years of the last eight years, and purchases must be less than $800,000.

Income limits were also increased. Now couples making up to $225,000 and individuals making up to $125,000 can qualify.

The National Association of Realtors reported that pending home sales rose in September for a record eight straight months. Vice President of Research Paul Bishop says 1.8 million people have taken advantage of the stimulus already, and it would like to see the momentum continue.

"The economy overall really can't recover in a sustainable way until the real estate market is stable," said Bishop.

The credits are estimated to cost the U.S. Treasury $10.8 billion dollars over 10 years. Critics say the credits reward people who would have purchased a home anyway.

NAR says the money goes much further than just each home sale.
"There's all kinds of additional spending that goes on, and that ripple effect is going to flow through the economy for every home sale that occurs," said Bishop.

The proof of the credits power will be when the foreclosure sales are sopped up, home values begin to rise, and secure homeowners who have been holding out start thinking about getting back into the market again.