Last night the Senate voted cloture on a bill that includes the extension of the first time home buyer tax credit.

This is not the final vote, however it effectively solidifies the plan to extend the $8000 first time buyer credit through April 30th and expand the credit to move-up buyers on a smaller $6500 scale.

The extension is an expansion, giving some move up buyers $6500 more in purchasing power, but that's only up to the income cap of $150,000 for single filers and $225,000 for joint filers...again, covering an awful lot of Americans, but not everyone. Why not make it available to Investors who could then buy some of the dilapidated properties and repair them?

So is this a good thing or just another prop up that will ultimately just prolong the housing problems?

Sure it is going to create some more sales but the credit only extends primarily through the winter/slow housing season. How are move up buyer going to participate when they can’t purchase the new home until they unload the current one. It may take them until next spring to find a buyer.

While a lot of this focus has been on First Time Home Buyers, the real money to get the economy moving is with the move up buyers and Investors. The inventory of homes at the lower end of the market is mostly junk. Poorly cared for properties that need lot of work. First Time Buyers don’t want this stuff but an Investor might? With an almost 10% unemployment many of the newer foreclosures are happening in the higher bracket between $250,000 and $500,000. With the income caps of the program this will eliminate a chunk of this market.

Let’s stop being cheap on the programs and making a bunch of political statements about all the people that are going to benefit and then find out only a handful made it work. Put the program out for all to use with reasonable deadlines. Not everyone will take advantage of it but that’s their choice. Ultimately is will reduce the inventory of unsold homes which will lead to higher demand.

Economics 101 --more demand = higher prices