At this point we all know that the first time home buyer tax credit has been extended into April 2010.  Not only has it been extended but it has also been expanded to move up home buyers.  Home buyers that have currently lived in their residence for more than five years and plan to move up will receive a tax credit of $6500.  With these incentives in place will it help the housing market?

No one knows the answer to this question yet but there is very little doubt that the initial first time home buyer tax credit helped to stabilize home prices.  The Case-Shiller Index has shown us four straight months of increases in home prices.  Although these increases are not large it is still significant to see the bottoming process in home prices.

With the extension of the tax credit it is likely that we are going to continue to see home prices increase over the next five months.  The question that many analysts have is what is going to happen when the tax credits stop?  There is a high probability that many future home owners will no longer look to buy a home when there is no tax incentive for them.  Only time will tell what will happen in this crazy housing market.

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Author: Mike Garner