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As if one new home buyer tax credit weren’t enough, the State of California recently re-enacted and extended the scope of its own version, originally passed in 2009.   As a result, some California buyers can take advantage of both — but only if all the stars align, and only for a short period of time.

The California Association of Realtors has published a useful chart that compares the two tax credits and I’ve reproduced it below (click to enlarge).

The rules are complicated, (see here for the Franchise Tax Board explanation) but here are a few key takeaways:

• To take advantage of both credits, you’ll need to be in escrow no later than April 20, 2010 and close escrow no later than June 30, 1010 — these time periods are driven by the federal tax credit.
• Even if you’re eligible for the full $10,000 California tax credit, you only get to claim a third of it per year for the next three years.
• Individual filers with adjusted gross income over $125,000 ($225,000 for joint filers) get a reduced deduction under the federal program.  There’s no federal credit at all for filers with adjusted gross income over $145,000 ($245,000 for joint filers).

If you figure SF median home prices at around $750,000, and assuming you could even qualify for a 75% loan and yet be under the maximum income limit, you’d be “saving” around 2.4% on your purchase if you qualified for every penny of both tax credits — less, since the California credit is spread over three years.  18 big ones isn’t small change in anybody’s language, but it surely shouldn’t be enough to drive anyone’s home-buying decision.

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• First-time home-buyers presumably have the down-payment sitting in the bank, so they can benefit from the drop in home values without having to worry about selling their own home in a depressed market to raise the downpayment.
• Mortgage interest rates are currently pretty low by historical standards and could go lower if the federal government decides to try to drive them lower.  If you can lock in a low rate for 30 years, that seems pretty smart.
• The best deals may be in “new” housing, where developers are desperate to get out from under bloated inventories.  Those inventories, however, are falling as construction of new projects has come to a halt.  With winter being a traditionally slow time to move houses, now may be a particularly good time to buy.

Along these lines, a loan officer recently told me that he’d heard of a downtown high-rise condo that was listed for $1.1 million and was sold by the developer for $770,000 — just enough to pay off the loan amount attributable to the unit.

There are words of caution, of course:

• Numero uno — as I’ve said here as well — first thing to do is to make sure you can qualify for the loan you need.  Check your credit score — you can do it for free at the consumer protection site, annualcreditreport.com — and start paying down your credit card bills now to up your score if necessary.
• Make sure your jobs and income are stable in this scary environment and that you’re not going to be too stretched to make your mortgage payments (obviously he’s not talking about buying in San Francisco, where most mortal folk are still paying a huge portion of their income to pay for their mortgage).
• Some markets, including the San Francisco-Oakland-Fremont Metropolitan Statistical Area (how’s that for a mouthful), may suffer further declines, based on a missmatch between historical rental rates and housing prices.  Lieber links to an article that discusses this further — but I advise caution.  The San Francisco-Oakland-Fremont MSA is huge.  Sure, prices may decline further in San Francisco, and if they do, it doesn’t take much of a percentage drop to result in a big dollar drop when you’re talking about median price homes of $800,000.  But SF is not Fremont, and there’s every reason to believe that SF will do better than the outlying areas where there are less constraints on building new product and where jobs are arguably more at risk.  Certainly, that seems to have been the consistent conclusion of the big brains at the Fisher Real Estate Conference I attended a few weeks ago (see below).

So is now the time to buy?  I tend to be a contrarian.  I like to buy when things look bad, and sell when the sun is shining, a philosophy I admit I put into practice only imperfectly.

However, my view is that if your time horizon is at least 5 years and preferably longer and you feel comfortable about the stability of your job/income, now is not a bad time to buy.  Good properties still get multiple offers, but it’s no longer an insane seller’s market; interest rates are pretty low, if you can qualify; and as Yogi Berra said, they aint making any more land — especially in San Francisco.

As Lieber points out, people don’t buy homes for investments — there are better ones — they buy them for the primal satisfaction of having a cave you can call your own, that you can decorate with your own cave paintings without having to consult the cave-lord.  If that’s your motivation, it might be time to start looking at those open houses — after checking your credit score.

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