A Different Kind of Double-Dip

By way of Jim the Realtor's excellent blog, the California First-Time Homebuyer tax credit has been extended. For about a month, if buyers time things perfectly, they may be able to "double-dip" and receive both tax credits. From the WSJ:

Tuesday, we told you that the (financially troubled) state of California is poised to offer home buyers up to $10,000 to get off the fence and to the dotted line. The $200 million program, split between first-time buyers of existing homes and new units, should keep the Golden State’s sales moving along post spring-selling season.

But, it might not get off to a peaceful start on May 1: Get ready for a stampede early on as some buyers rush to overlap with the federal tax credit that’s dangling as much as $8,000 to buyers. (Yes, that’s up to $18,000 for buying a house.)

For the federal incentive, contracts must be inked by April 30, while closings have to happen by June 30. The California credit covers closings on existing or new homes on or after May 1, leaving a short window for double dipping. “We already anticipated increased contract activity in March and April due to the federal tax credit with scheduled closings in May and June,” writes Credit Suisse builder analyst Dan Oppenheim. “These buyers will now be eligible for both the federal and state credit and will likely consume a significant piece of the state credit given the first-come, first-serve allocation.”

There is apparently no income limit for the State credit, but there is for the Fed ($75,000 for individuals, $150,000 for couples I believe).

Here is some more information:

http://www.leginfo.ca.gov/pub/09-10/bill/asm/ab_0151-0200/ab_183_bill_20100322_enrolled.html

http://www.federalhousingtaxcredit.com/

Ultimately, you're not knocking a whole lot off the price, but if you're set on purchasing this spring anyway you really have no excuse. It's free money (care of you, your kids, and your grand kids as they like to say).

Odds are that by August the home price will go down by at least as much as you "saved," but like I said, if you're poised to buy soon regardless, why not just have some free loot to furnish your new pad?

P.S. Expect home sales to jump substantially in California during the next few months.

P.P.S. Sales will need to rise substantially to absorb the (finally) growing inventory. Plus, I expect a lot of sellers, hibernating for the winter and hoping for a better tomorrow, to throw their properties on the market this spring. If that results in improved quality of inventory (it is absolutely dismal out there as it stands), you better believe I'll go out and kick some tires too.