Monday, November 16, 2009

Tax Credit Creates Home-Buying Mood

Panorama of Newark from HarrisonImage via Wikipedia

BY KENT MALLETT • Advocate Reporter • November 15, 2009

NEWARK -- Shaun Hutchinson and Kasi Frenton have not become homeowners yet, but the recent extension of the first-time homebuyer tax credit has kept them looking.

The Newark couple have been searching for a home for more than three months and were relieved when the government extended the federal tax credit deadline from Nov. 30 to April 30.

"We're just tired of throwing money away on rent," Hutchinson said. "We'll get one eventually, even if we don't make the tax-credit deadline. At least now we don't feel as rushed."

Tim Hughes, a real estate agent with Keller Williams Greater Columbus Realty, showed the couple a home Thursday on Neal Avenue in Newark.

"We're happy they extended the credit," Hughes said. "They know I don't want them rushing into something they're not going to be happy with. But, on an $80,000 home, that (credit) is a 10 percent discount. That's big."

Monica Lough wrote, in response to Advocate solicitations for comment, that the tax credit has been a blessing for her family.

"The stimulus money for first-time homebuyers gave the opportunity for my two children to purchase their homes," Lough wrote. "This is a great program, otherwise they would both still be renting and flushing their money down the drain."

Local real estate agents say the housing market has improved in recent months, helped by the refundable tax credit for 10 percent of the sale price up to $8,000.

"It's one of the best things the government could do to help the economy," said Pamela Powell, of Real Living HER. "Real estate is the best investment you can ever make. With the stimulus, I look for people to continue looking."

It will, however, take a late surge in sales this year to match 2008, one of the worst years ever for some agents. The total sales and average price are down compared to last year.

For the first 10 months of this year, there were 2,217 sales in the county, compared to 2,394 through 10 months of 2008. The average price is down from $125,908 to $115,486.

"I had a good October," Hughes said. "The tax incentive is definitely helping with first-time homebuyers. It'll help people on the fence. If homes are under contract by April 30, they still have 60 days to close after that."

Pat Guanciale, of Coldwell Baker King Thompson, said the housing market has hit bottom and is on the way back. But, it won't be a sudden turnaround. He compared it to a U-shaped recovery, not a sharper V-shaped one.

"It'll probably be another year before we can say we're out of this mess," Guanciale said. "Sellers have adjusted to the idea that maybe our home is not (selling for) what we thought it was."

The extension of the tax credit should provide hope for sales during the normally slow winter season.

"There were people rushing to beat the deadline and a lot of people said they're not going to buy a home because I can't get that credit," Guanciale said. "Now, they're back in the market."

Don Ellington, of Pickenpaugh and Ellington Realty Co., said he's excited about the new $6,500 tax credit for existing homeowners. But, he said, it might not give them enough time to sell their home and find another.

"It's tough for existing homeowners," Ellington said. "If their home stays on the market five or six months, then what happens? If they made it until the end of next year, that'd be better."

The glut of foreclosed homes has held back the housing market, agents have said. Lenders are trying to work with homeowners, Guanciale said, but the foreclosures remain at near record numbers.

Foreclosures are slightly behind last year's record, but have topped 1,000 for the fourth consecutive year.

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