Emerson said a $6,500 credit was not likely to spur a robust recovery in the move-up market because many existing homeowners have seen the balance of their mortgages drop below the value of their homes.
"The problem with most move-up buyers is you have to have equity in your current home to move up . . . and they don't have any equity to roll into their new home," the real estate agent said.
Extending and expanding the credit make little sense to Christopher Thornberg, a Los Angeles economist who had predicted the housing bubble.
"The reason you had a very big rush into the market was because people were trying to rush in before the tax credit's expiration," he said.
"You extend the tax credit, and basically it becomes a subsidy, and people get more money for their homes when they buy, and real estate agents get larger and larger commissions."
Cameron Findlay, chief economist at LendingTree, an online exchange that links buyers with lenders, said the expanded tax credit wouldn't have as much effect as the current first-time buyer credit because it wouldn't do as much to reduce the number of houses on the market. But Findlay said the credit was worth extending and expanding because the real estate market remains fragile.
With the unemployment rate at 9.8% and the possibility it could reach double digits when new data are released Friday, the legislation also extends jobless benefits 14 weeks in all states. The $2.4-billion provision provides an additional six weeks of benefits in California and the 26 other states that now have unemployment rates of 8.5% or higher. California's 12.2% unemployment rate in September trailed only Michigan, Nevada and Rhode Island.
Congress included an extension of unemployment benefits in the economic recovery bill approved this year, but as many as 600,000 people already have exhausted their benefits and an additional 700,000 are scheduled to lose them by the end of the year, according to the National Employment Law Project.
The latest extension adds to previous ones and to the basic 26-week period. Altogether, the federal government would now provide unemployment benefits for up to 99 weeks.
In a separate provision, all companies would be allowed to use any losses this year or last year to offset taxes paid in the previous five years. A similar measure was included in the economic stimulus legislation approved this year but was limited to small businesses.
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richard.simon@latimes.com
alejandro.lazo@latimes.com
