As a lot of people know by now, the new home buyer tax credit was signed into law on Nov. 6 and was effective the next day.

Regardless, there’s one question we’ve gotten a lot at the Arkansas Realtors® Association (ARA) – when can a buyer purchase a house to be eligible for the credit? Anyone who got a home under contract on Nov. 7 and beyond and met certain income requirements was eligible for the credit.

It’s important to point that out because a lot of us simply aren’t used to the federal government moving so quickly on anything. It may appear that the credit went through in a hurry but there were several months of negotiation that led up to it becoming law.

It’s true that the Senate approved the bill on a Wednesday, the House passed it on Thursday, President Barack Obama signed it into law on Friday and it became effective on Saturday, but debates over extending the credit started in the summer.

In fact, there were about 20 bills floating around in Congress that did everything from continuing the $8,000 tax credit for first-time home buyers that was in place (and was set to expire on Nov. 30) to expanding that credit to $15,000 for anyone purchasing a home.

What we got, of course, was an extension of the $8,000 credit for first-time home buyers and a new credit of up to $6,500 for people who already own a home but would like to either move up into a more expensive one or downsize and purchase a house that costs less. Here at the ARA, we’re glad to see the $6,500 credit as Realtors® have been saying all year long that those “move up” buyers have been absent from the market.

It’s obvious that the first-time home buyer credit helped sell some homes costing around $150,000 or less throughout the Natural State. That’s the price point where a lot of first timers shop, after all.

Some Realtors® have reported that keeping enough of those homes in inventory was a problem, in fact. The homes that weren’t selling are the ones that cost considerably more than $150,000 – the market for homes costing $300,000 or more was practically stagnant in the Little Rock area, for example.

Hopefully, the $6,500 credit will encourage some people who have been hesitant about selling their existing homes and purchase new ones to enter the market and reduce some of the high inventory levels that set in once you get to the $200,000 range. Markets have recovered to an extent in the lower ranges, but we really do need to see some more activity at higher price ranges before we can start talking about thriving housing markets in Arkansas.

And, by the way, the Nov. 30 deadline attached to the first-time home buyer tax credit has been effectively removed. Under the new law, all people wanting to take advantage of the tax credit need to get a home under contract by April 30 and close on it before July 1.

Realtors® in Arkansas have been pleased with increased sales throughout 2009 and hope we can start talking about recovering markets throughout the state in 2010. The new tax credit may make that recovery happen a little sooner than it would have otherwise.

House to House is distributed weekly to publications in the Natural State by the Arkansas Realtors® Association.

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