As home sales increase in Napa and across the country, the number of days for first time homebuyers to take advantage of the $8,000 government credit is decreasing.

Instituted as part of the $787 billion economic stimulus package signed by President Obama in February, the First-Time Home Buyer Credit has done its job in both a practical and psychological way. Mark Zandi, Moody’s chief economist, estimates that the credit will create 400,000 new and existing home sales before its termination.

History and the economy have shown that the two primary stimuli to housing affordability and sales have always been low prices or low interest rates. The two lines have crossed, giving would-be home buyers interest rates near 5 percent and home prices 25 to 40 percent of values of just six years ago.

As if these two factors were not enough to get would-be buyers into the market, the true tipping point may well have been the $8,000 tax credit that caused new homeowners to take the plunge.

The demographic of this portion of the buyer market was released last week in the California Association of Realtors 2009 First-Time Home Buyers Tax Credit Survey. A median age of 31 years, median home price of $323,400 and median income of $103,390 typified the 40 percent of home buyers who stated “they would not have purchased a home if the federal tax credit for first-time home buyers was not offered.”

Ranking their motivation to purchase a home on a scale from one to five, participants in the survey gave the tax credit and low prices the same rating — 4.5. The results also reported that the tax credit was measured less important as income increased; 94 percent of those earning under $100,000 intended on using the credit while only 51 percent of those earning over that amount expected to apply.

With the credit scheduled to expire on Nov. 30, most lenders and Realtors are seeing the end of September as the practical deadline for having a contract accepted.

The remaining 60 days create a tight time line for obtaining funding and closing escrow.

The Realtor, home building associations, lenders and would-be first time buyers are pushing Congress for a continuation of the $8,000 credit. The estimated cost of extending the program for another six months is at $15 billion to $17 billion.

The momentum of opinion on an extension of the credit moves from even to slightly in favor. Senator Majority Leader Harry Reid, along with others, has introduced a six month extension to retain life in the market place as the employment situation and general economy improve.

In an interesting and perceptive comment, Financial Services Roundtable lobbyist Scott Talbott was quoted as saying, “Congress works best on deadlines and crisis; and we sort of have both in this one.”

The White House has its own economic team collecting data to make recommendations for what action to the president will elect to take. The decision to extend the $8,000 credit or allow it to expire is being watched eagerly by home builders, lenders, Realtors and most carefully by would-be, first-time home buyers.

To close the window on this element of economic stimulus may block on of the major rays of light shining on economic recovery. 

Charles Bogue is a real estate broker in Napa. He can be reached at 486-5511 or e-mail: cbnapa@napanet.net.