Some scramble to buy as homebuyer credit expires
The federal homebuyer tax credit expires today, the final day of a buyer scramble to qualify for thousands of dollars.
The credit seems to have given a kick to Twin Cities home sales in recent months.
Some industry players and homeowners hope the tax credit has given home sales and prices some upward momentum that will continue in coming months. But others suspect the tax break merely accelerated purchases by folks who were going to buy homes anyway -- and really don't need the money from Uncle Sam.
Angie Ehalt and her husband, Keith, put in a bid for a townhouse in Ramsey, not expecting to get an $8,000 tax credit.
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"There was a miscommunication and I thought I didn't qualify for it for some reason," Ehalt said.
Still, they thought they had a great deal on a new home. Their winning bid of $110,000 was getting them a three-bedroom home that sold for nearly $200,000 four years ago. Then their real estate agent told Ehalt that she and her husband would be getting the tax credit, too.
"On Sunday, he said, 'No you qualify for it.'" she said. "And then I was like super excited even more."
Ehalt just hopes she can get all the paperwork done in time to snag the tax credit, which expires at midnight tonight. Purchase offers have to be signed by tonight, and sales must also close by June 30.
New homebuyers can get a tax credit of up to $8,000. Some repeat homebuyers can pocket as much $6,500.
Income limits are very liberal. Full credits are available, for instance, to couples with joint incomes of up to $225,000.
Last week, there were nearly 1,300 pending home sales in the Twin Cities market. That's the greatest number since 2005. Local real estate professionals say the tax credit has been a key factor in boosting sales.
Tony Maurer, president of the St. Paul Area Association of Realtors, said the tax credit has especially helped spur sales of homes priced at $150,000 or less.
"The looming conclusion to the tax credit certainly motivated people to get out and kind of make this move," he said.
Barb Jandric, general sales manger at Edina Realty, estimated one in four sales were spurred on by the tax credit.
"There are people who because of the good pricing and good interest rates that would have purchased anyway," she said.
That pattern bugs some people in the real estate business, including Joe Metzler. He's a loan officer with Mortgages Unlmited in West St. Paul. He says business is up about a third at his office.
But when it comes to the tax credit for homebuyers, "from a taxpayer standpoint, I couldn't hate it more," he said. "Because the bulk of the people taking advantage of what you and I are paying for here to stimulate this market tell me they don't need it. 'Oh, I was gong to be buying a house soon. But, hey, I will buy before then to get my free money.'"
Metzler expects home sales and loan originations will be slower than normal in coming months because people bought homes earlier to get the tax credit.
"Next month the numbers are going to fall," he said. "And then all the reports are going to come out: 'Oh, housing sales are way down.'"
Home sales typically fall in the summer. But Edina Realty's Barb Jandric does expect home sales will be up for the full-year in 2010.
She sees the economy and housing market turning around, though she expects it could be a few years before housing really bounces back.
"We have watched prices stop sliding. We can pick up the newspaper everyday and see some aspect of improvement, whether its consumer confidence. The stock market improving. Even unemployment not getting worse," she said.
Jandric says more people are looking at homes and thinking about buying. They're certainly noticing prices are much lower.
In fact, the median sales price of a Twin Cities home is down about 25 percent from four years ago to about $165,000. And when people look at houses, Jandric says they buy ... eventually.
