It’s that time of year again: time for lobbyists to convince Congress to extend the home buyer tax credit.

The National Association of Realtors and other industry groups are beginning to make the rounds on Capitol Hill to press their case, which goes something like this: We know you’ve extended the tax credit two times already, but the housing market is still fragile, the tax credit is working, and don’t forget– you’re up for re-election soon. In other words, do you really want to own the next leg down in home prices?

They’ll also make their case by reminding pols that a series of other market supports are being removed, the largest of which is the Federal Reserve’s purchases of $1.25 trillion in mortgage-backed securities that expires next month and has pushed mortgage rates to postwar lows for much of the past year. The Federal Housing Administration is also under pressure to pull back its lending, and more foreclosures could add to the housing inventory as borrowers fail to qualify for modifications.

Industry groups are also pushing the argument that the credit should be extended because it’s taking so long for banks to approve short sales, where lenders agree to a sale for less than the value of the mortgage.

To recap, Congress first passed a $7,500 tax credit in 2008 for first-time buyers, but that credit had to be repaid over 15 years. When it expired one year ago, Congress extended it, expanded it to $8,000, and said it wouldn’t have to be paid back. Just before that credit was to expire last December, Congress extended it again, until April 30 (sales contracts signed by April 30 have until June 30 to close). A new credit of $6,500 was created for current home-buyers. “There’s nothing more permanent in Washington than a temporary tax credit,” jokes Howard Glaser, a housing-industry consultant.

This time, the lobbyists certainly have their work cut out for them. For one, industry groups last time swore that the last tax credit extension would be, well, the last extension. To secure the deal, the lawmaker who shepherded that effort through Congress, Sen. Johnny Isakson (R., Ga.), made clear at the time that extending it again would be a nonstarter. (His spokeswoman says that he has no plans to offer any legislation extending the credit. “Part of the benefit of the tax credit is the urgency of it sunsetting,” said spokeswoman Sheridan Watson.)

Economists mostly agree that the tax credit has helped to goose demand and sell more homes, though there’s still considerable debate over just how many homes would have sold anyway.

Mark Zandi, chief economist at Moody’s Economy.com, pushed to extend the tax credit last fall but says now it’s time to let it expire. “It’s worn out its benefit,” he says. “If you extend it again, it isn’t going to do much, and what you’re doing is providing a tax break to folks who bought anyway.”

While there’s still about 10 weeks before the current tax credit expires, that doesn’t leave much time for buyers looking to cash-in, notes Keith Gumbinger of HSH.com, a financial publisher. Home sales surged last October when it looked like the tax credit might expire for good, and then plunged in December, once it the credit had been extended.

Readers, is it time to let the tax credit walk off into the sunset?

Written by NickTimiraos for The Wall Street Journal

Pending Home Sales for December were up significantly from November's reading, and up a healthy 10.9% over December 2008, as homebuyers take advantage of today's low rates and tax incentives. And speaking of low home loan rates, the Federal Reserve purchased $12 billion in Mortgage Backed Securities last week, bringing the total to $1.173 trillion since the program began in January of 2009...which leaves just $77 billion in purchases to be made over the next eight weeks until the program ends on March 31^st. While home loan rates improved very slightly during this volatile week - don't forget that when the Fed is done buying, home loan rates will be very susceptible to moving higher. Please reach out to me to discuss how you or someone you know might benefit from current low rates, or the Homebuyers Tax Credit. The clock is ticking on both these fronts - so why wait? You can reach me at richard.oceguera@corcoran.com.

(The above info provided by Harold Sokol of Manhattan Mortgage)

The number of homes listed for sale rose only modestly in many parts of the U.S. in January, contrary to the usual big increase during the month. (See data.)

Housing analysts have been expecting more for-sale signs to sprout as banks catch up on a huge backlog of unresolved foreclosure cases and start putting more foreclosed properties on the market. That would likely put more downward pressure on prices, which have been stabilizing at the lower end of the market. But there is little sign that the expected buildup in inventory is happening.

The supply of homes available for sale in 27 major metropolitan areas at the end of January was up just 2.87% from a month earlier, according to figures compiled by ZipRealty Inc., a real estate brokerage firm based in Emeryville, Calif. The ZipRealty data cover all single-family homes, condominiums and town houses listed on local multiple-listing services in metro areas where the firm operates.

Inventories typically rise sharply in January after the holiday lull in home shopping. Zelman & Associates, a research firm, says that nationwide listings increased an average of 8.7% in January from the prior month between 1982 and 2008.

Ivy Zelman, chief executive of the firm, said it was surprising that there was no jump in January. But she said colder-than-usual weather may have caused some sellers to delay listings and that others may be waiting for a stronger market.

Compared with the year-earlier month, the January inventory in the 27 metro areas was down 22%.

The Zip data don’t cover New York City. Miller Samuel Inc., an appraisal firm in New York, reports there were 7,344 cooperative apartments and condominiums on the market in Manhattan at the end of January. That was up 10% from a month before but down 19% from January 2009.

An estimated 7.5 million households are behind on their mortgage payments or in the foreclosure process. Many of those homes eventually will hit the market, but government efforts to avert foreclosures are slowing that process as banks try to figure out which borrowers might be saved by reduced monthly payments.

Home sellers this spring may benefit as buyers rush to qualify for federal tax credits on purchases. To qualify for those credits, buyers must sign purchase contracts by the end of April and complete the transactions by the end of June.

By James R. Hagerty
The Wall Street Journal Online