Local real estate brokers are hailing the probable extension of the federal first time homebuyer tax credit and a new $6,500 credit for homeowners looking to trade up to more expensive homes.

According to the Web site Real Estate Economy Watch, action by the U.S. Senate has cleared the way for the measure, which also contains an extension of jobless benefits, to be signed into law very soon.

If it is, the tax credits would provide a continuing boost to the local real estate market, said David Lutton, president of Charles Reinhart Realtors.

"It will be helpful," he said. "I expect the extension piece will help to maintain activity through the slow winter months."

The Senate measure contains an extension of the $8,000 first-time buyer credit through April 2010, and a $6,500 credit for existing homeowners who buy more expensive homes up to a cost limit of $800,000. The first-time credit would be extended to couples with income of $225,000, an increase of $50,000.

Multiple listing service statistics show that in Ann Arbor, 16 percent of the more than 2,100 homes and condos listed for sale are priced between $400,000 and $800,000, while nearly 77 percent are listed at less than $400,000, the more customary level for first-time buyers.

Still Lutton noted, sales statistics show market activity has been concentrated in the range of homes below $250,000, rather than those priced at higher levels.

"I don't think it's lack of inventory, it's simply that portion of the market is not as active," he said.

And while a $6,500 tax credit is not enough to spur significant activity in the upper levels of the market, there is a segment of the potential buying public for which it would be a deal-maker.

"For a guy who's underwater and is continuing to make payments, this is no magic wand. But for someone with equity who has been postponing what maybe is a life need," he said, the credit will help.

Sharon Snyder, president and CEO of Prudential Snyder Realtors, said making more people eligible for the tax credit will stimulate the market.

"Expanding the tax credit for more than just first-time buyers would certainly help," she said.

She said recent national data showing that half of the home sales this year have used the tax credit are probably applicable locally.

She also said the idea that the tax credits are an artificial prop for the real estate industry and thus unsustainable - similar to the "Cash for Clunkers" program for the auto industry - is misguided.

"Housing is probably the No. 1 issue in with the larger economy," she said. "It's that important."

Lutton echoed that.

"There's no question that the tax credit is supporting the residential real estate sector, but every time a home is purchased, it triggers of bundle of economic activity ... there is an awful lot of Main Street spending," he said.

Freelance reporter Dan Meisler can be reached at danmeisler@gmail.com.