A good time to buy? You bet

Every bad real estate market has a silver lining. In today’s sluggish housing market, that silver lining isn’t even hard to find: If you’re looking to buy a home, now’s a great time to do so.

Look at the facts: Sellers are desperate. Many of them have had homes sitting for sale for months. Some have had them on the market for more than a year. These sellers are more than willing to negotiate, and not just on price. Many sellers are now willing to make repairs and renovations to their homes to help get them off the market.

At the same time, housing prices across the country are dropping. The National Association of Realtors reports that the median asking for existing homes across the country stood at $215,100 in June, down 6.1 percent from a year ago.

If you’re a first-time buyer, the news gets even better. Last week, Congress passed the Housing and Economic Recovery Act of 2008. This legislation will allow about 400,000 homeowners refinance into affordable government-backed mortgage loans. More importantly for new buyers, though, the legislation provides a temporary tax credit for people buying a home for the first time.

The credit will provide $7,500 toward the purchase of a home, and can be used for purchases made from April 9 of this year through June 30 of next.

There are some limits on this tax credit. For one thing, home buyers, even first-timers, who file their taxes as single or head-of-household taxpayers can only claim the credit if their modified adjusted gross income comes in at less than $75,000 a year. For married taxpayers filing a joint return, this limit is $150,000.

Secondly, buyers must repay the credit to the government over 15 years or when they sell the house, depending on whether there is sufficient capital gain from this transaction. The good news is that the government does not charge any interest.

So there you have it, a huge silver lining for buyers.

For sellers? Unfortunately, I don’t have any good news for you.