In two short days, the current First-Time Homebuyer Tax Credit is up for renewal. This Friday, November 6th, a bill extending this popular tax credit goes to full vote in the House of Representatives for approval. Already approved by the Senate, this bill would extend the current $8,000 tax credit for first time homebuyers until April 1st, 2010.

The current bill is also set to extend a tax credit to non-first time homebuyers. The current language proposes a $6,500 tax credit for homeowners buying another home that have occupied their current homes for at least 5 of the 8 last years. There are a few other restrictions such as income caps and the language has a high possibility of changing before the bill is finalized and sent to President Obama for signature (he is expected to sign the bill).

The current first time homebuyer tax credit has been seen by experts as largely accounting for the improving market we’ve seen in many parts of the country this fall. While many in the real estate industry were hoping for a longer extension into 2011, the addition of the credit for non-first time homebuyers is an interesting addition. Experts feel that the threat of additional government spending and the current climate of revitalization in many locations caused legislators to extend the credit for 5 months, rather than a full year.

The addition of a $6,500 credit for current homeowners may additionally help the market next year. It will definately soften the blow of sellers taking a loss on selling a home if they know it can be made up + $6,500 on their next home.

The S&P/Case Shiller index released yesterday, September 29 is a major indicator of national and regional home price movement. The new values for August displays the 6th consecutive month of improvment in home prices across the country from a low point in February/March. In our region, it is the 3rd consecutive month of improvment for the greater Chicagoland area.

In July, our median home values increased by 2.6%, the largest increase since the average began to decline in October of 2006. This point to further stabilization of our national and regional real estate market and gives hope to the notion that the biggest decline in home values in decades is approaching an end.

Current home values are at similar levels than they were in March 2003 and are currently approximatly 24% off the high average value reached in October 2006. This is an overall improvement from the low point of 28% reached in March of this year.

The current government tax incentive is continuing to bring out buyers this fall and should contine to improve home sales and values in our region and across the country. The only wrench in the works is the still-high national rate of foreclosures plaguing our country. This and the winter season has the possibility of putting a dent in recovering home values. If the rate of foreclosure begins to falter and decline howeve, this could accelerate the rate of home value recovery and effectively signal and end to the housing slump we’ve been in for the past 3-4 years.