The Success of Real Estate Atlanta Blog

Source: Builder | November 9, 2009

By Fran Daniel, Winston-Salem Journal, N.C.

Nov. 9--The up to $8,000 tax credit for first-time homeowners has been a boost for the housing industry in the Triad.

Now that the credit has been extended, local homebuilders and real-estate agents hope it will keep stimulating sales and help push the economy into recovery.

"It's going to be a positive shot in the arm for the industry with the extension for the first-time homebuyers," said Jerry Herman, the executive vice president of the Home Builders Association of Winston-Salem.

In North Carolina, 44,847 people had claimed the tax credit for first-time homebuyers as of Aug. 22, according to the Internal Revenue Service.

The credit was scheduled to end Dec. 1, but President Obama signed a $24 billion economic-stimulus bill Friday that included an extension of the $8,000 credit for first-time buyers and new tax credits of up to $6,500 for buyers who have lived in their current homes at least five years and want to buy a different home.

To qualify for the incentives, which were added by the Senate, buyers have to sign a purchase agreement by April 30, 2010, and close by June 30.

Herman said that the $6,500 tax credit for home­owners wanting to "move up" into new or existing homes will help tremendously by giving them the incentive to buy homes in a buyer's market.

Brooke Cashion, a broker for Allen Tate Realtors, has traditionally worked with customers looking for their first home.

She started seeing customer interest in the tax credit in June. Since that time, she said, she has closed at least seven home sales that were a result of the tax credit and expects several more closings this month.

"For anybody who was on the fence, for anybody who was coming out of college and considering renting versus purchasing, I think this gave them an opportunity and an incentive to be able to take advantage of the tax credit and the tremendous amount of inventory that they have to choose from, coupled with great interest rates," Cashion said.

Some recent first-time homebuyers in Winston-Salem said that the tax credit helped motivate them to buy a home.

Dana Mora, a client of Cashion's, closed on a ranch-style house with three bedrooms and two baths in August.

"I don't think in my lifetime there will be something else like the tax credit," Mora said. "It was definitely a deciding factor."

Tommy Camp, the president and chief executive of Prudential Carolinas Real­ty, said that the company has seen an uptick in sales in the past 60 to 90 days, which its agents attribute to the tax credit for first-time homebuyers.

"We've found that it has had a real positive impact on the below-$300,000 price range," he said.

Elizabeth Valier of Winston-Salem worked with her mother, Patricia Valier, a broker with Prudential Carolinas, to close on a house in August.

"It was a huge incentive for me because I was kind of on the fence about whether or not to buy a house," Elizabeth Valier said.

Kathryn Bornac, a mortgage consultant with Home Services Lending, the in-house lender at Prudential Carolinas, estimates that possibly 80 percent of her business has been first time homebuyers in the past three to four months.

"This legislation has been critical to their decision to buy homes," Bornac said. "These were not people who probably would have otherwise purchased had it not been for the tax credits."

Glenn Cobb, the chief staff executive for the Winston-Salem Regional Association of Realtors, said that the association has always supported the incentives for homebuyers and encouraged its members to send letters and make phone calls to members of the Senate and House of Representatives.

He said that some Realtors were concerned that as the original Dec. 1 deadline approached that some first-time homebuyers would change their minds about buying homes.

Matt Pannell, the director of sales and marketing for Wade Jurney Homes, has a different concern.

He wishes that federal officials had waited until the Nov. 30 deadline to extend the program because he is worried about the effects on sales for home builders in December, which is traditionally a slow period for the housing industry.

Wade Jurney Homes has been offering extra discounts on homes, provided people close by Nov. 30.

"Buyers lose the urgency to close knowing now that they can wait until January and still get the same program," Pannell said.

Still, he is excited about the extension and expansion of the program.

Pannell estimates that Wade Jurney Homes' business increased 20 percent from January to the present compared with the same period in 2008 as a result of the tax credit for first-time homebuyers.

He said that a lot of the builder's customers have been borrowing "gift money" from family members for down payments on homes. After the closing, they would get the tax credit and repay family members.

Getting the incentive has been the difference between buying and not buying.

"In this market and in this economy it's very difficult," Pannell said.

fdaniel@wsjournal.com