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The government has recently renewed the wildly successful “Cash for Clunkers” program, doubling the initial earmark designed to stimulate sales of fuel-efficient automobiles in exchange for ones that are much less efficient.

We are wondering if a similar action might come in November when the “First Time Homebuyer” program is scheduled to come to an end.

Our experience of late is that first-time home buyers are out in greater numbers than in recent memory. We attribute this to several factors: 1) Lower priced homes; 2) Low interest rates (these two combined making up the favorable “affordability index”); FHA loans that allow for as little as 3.5 percent down payment, and; 4) The (up to) $8,000 tax credit for qualified buyers who have not owned a home in the past three years.

For those of us in South Orange County, this program has been a huge factor and is at the forefront of buyers’ minds as we work with them to close on a property before the November 30, 2009 deadline. Herein lies the challenge: The properties that most of these buyers are looking for are under $400,000. These homes have become ultra competitive. In most cases, our buyers are writing well-qualified offers at above asking price (usually within days of the property hitting the market) and are consistently losing out to higher bidders or investors with all cash.

It seems unfair that the program would conclude before these potential, well-intentioned buyers can secure a reasonable property within the constraints of the program. Of course, one of the major obstacles in being able to close prior to November 30 is the high percentage of short sale properties on the market. Since it takes so long to find out whether or not an offer has been accepted on a short sale, it would seem to behoove the buyer to submit multiple offers (a strategy encouraged by many of our peers). However, this simply compounds the problem for everyone (but that’s a topic for another post).

In any case, we hope that the program gets extended, as we see it as a great way to encourage new buyers at the low end of the real estate market, allowing the middle and upper segments of the market to benefit through the percolation effect.

Please feel free to express your opinions or observations.