End of Federal Homebuyer Tax Credit

An $8,000 federal homebuyer tax credit ends Friday, after months of helping fuel sales among first-time customers. But despite concerns that the buyer frenzy will diminish as the credit goes away, Realtors and observers say the market will continue strengthening and prices will rise. That increase is partly why the end of the federal tax credit is unlikely to delay home purchases among Americans who feel now is the time to buy, according to Prudential Real Estate and Relocation Services Inc.

According to the survey, low interest rates and the expectation that rates and housing prices will rise were more important than the tax credit in prompting a purchase. Of those surveyed, 61 percent cited low mortgage interest rates as "very important" to their decisions higher than the tax credit or cheap prices. In contrast, 65 percent believe that the end of the tax credits will have little or no effect on their pursuit of a home.

That's not to say the tax credits didn't play a role in reviving a market crushed under the weight of defaulted subprime loans. More than 90 percent of consumers, according to the prudential survey, believe the credits have helped first time homebuyers and the U.S. housing market in general. Many local Realtors said the credits helped move a lot of buyers off the fence to pursue a first home.

The California Association of Realtors has repeatedly pointed to the credits as fuel for the market. And industry lobbyists have pushed leaders on Capitol Hill to extend the credit once again. It was unclear if that would happen, but lawmakers instead seemed to be emphasizing ways to create jobs as a way to drive the home market.