By Greta Guest, Detroit Free Press

Oct. 25--On top of getting a great bargain on their first home, Peter and Nell Welch also qualify for the first-time home buyer tax credit.

The couple purchased a 3,400-square-foot home with four bedrooms and three bathrooms in Grosse Pointe Farms. They paid $145,000, compared with the $350,000 the previous owner shelled out in 2005.

The $8,000 tax credit enticed them to buy now, before the current credit expires Nov. 30.

"We've pretty much been looking for the past year," Peter Welch, 28, said. "It was neat because we were able to go right into our dream house rather than buy a starter home and live there for a few years. It's nice to know we can live here for 30 years and be happy."

The tax credit was part of the American Recovery and Reinvestment Act, enacted in February. The credit is 10% of the purchase price or up to $8,000.

Realtors and builders want the credit extended through Sept. 30, 2010. Housing industry groups say the credit has helped sell 350,000 homes nationwide.

"The housing market still has a long ways to go to realize a recovery, particularly in Michigan," said Robert Filka, CEO of the Michigan Association of Home Builders.

Michigan consistently has ranked in the top 10 for foreclosure filings, according to RealtyTrac Inc. data. And home prices have fallen 24.6% in the past year through July, according to the S&P/Case-Shiller index.

Filka said it is critical to continue providing an incentive to bring more buyers into the housing market. "We can't afford to stall what momentum we have right now," he said.

About 55,000 Michigan residents had benefited from the credit, according to figures released by the Internal Revenue Service in September. More than 1.4 million taxpayers nationwide have used the 2009 credit or a smaller one offered last year, the IRS said.

Congress is expected to hold hearings on the tax credit over the next few weeks.

Nearly one in five prospective first-time home buyers said extending the $8,000 tax credit would be the primary influence on their decision to buy a home before the end of 2010, according to a recent survey by Zillow.com.

That would bring 334,000 buyers into the market who would otherwise not buy a home, according to Stan Humphries, Zillow's chief economist.

But this would translate into an additional $14.86 billion in government spending.

"For every five homebuyers who receive the credit, four would have bought their home even without the credit," Humphries said.

Meanwhile, the Michigan Association of Home Builders has joined with the Michigan State Housing Development Authority to promote home sales through a statewide radio campaign.

The radio spots, being aired through November, promote the first-time homebuyer tax credit and MSHDA's program that offers low- and moderate-income homebuyers up to $7,500 in down payment assistance. Combining the state and federal incentives could mean up to $15,500 in help to buy a home.

For information on the incentives, go to www.MichiganHomeTaxCredits.com. Contact GRETA GUEST: 313-223-4192 or gguest@freepress.com

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