Is end of popular tax credit causing home sales to plummet?
With the official end of the first-time homebuyer tax credit, some say the local real estate market has seen a drop in sales while others think the credit never made much of a difference.
Byron Bellew, a broker for Keller Williams Realty, said that the real estate market has already been hurt by the ending of the tax credit.
“It has already affected us…as soon as that ended, sales did start to drop,” Bellew said. “They started to drop nationwide, but on the local level we saw it too. The summer has been slower than usual.”
To be eligible for the $7,500 credit, taxpayers had to buy, or enter into a binding contract to buy, a principal residence on or before April 30 and close on the home by June 30. The tax credit could only be used on homes that are a primary residence.
The credit became available in 2008 as part of the Housing and Economic Recovery Act and was expanded in 2009 as part of the American Recovery and Reinvestment Act.
Bellew said he hopes that the government will institute a similar program in the future to boost real estate sales.
“I have hopes that some program will be put in place, not necessarily (a tax credit), but some program could be put in place to help the real estate market increase nationwide as well as locally,” he said. “My opinion is that we still have a way to go before the real estate market rebounds.”
On the other end of the spectrum is Kori Matherne, with St. Charles Realties. Matherne said she doesn’t think the area has seen or will see a big fluctuation in sales because of the tax credit.
“I don’t think it really affected us,” Matherne said.
Mary Bergeron, with Prudential Gardner Realtors, also did not think that the tax credit had made as much of an influence on the market as she had hoped.
“We’ve been disappointed in how much the tax credit actually stimulated the market,” Bergeron said. “The most significant thing we discovered was that although there were a lot of people who wanted to take advantage of the First Time Homebuyer tax credit, a lot of them could not qualify.”
Bergeron said that many people don’t realize how much planning is needed to buy a home, and some did not have good enough credit to qualify for the tax credit.
“It’s really important for people who want to purchase a home to begin to think about it in advance and make sure that their credit is in good standing,” she said. “For those people who were able to take advantage of (the tax credit), it was a great thing and it did stimulate the market some, but certainly not to the extent that some of us in the real estate business would have expected.”
Nita Naquin, with ERA Sterling Properties, said that she believes the end of the tax credit will affect lower-priced home sales.
“I think with the tax credit, the lower-end houses were selling a little better. Right now it seems like anything over $200,000 is selling more than the ones under $200,000,” Naquin said. “I think (the credit) did stimulate more sales last year. I think that buyers are all looking for only price now and we are seeing more reductions to get sales.”
Vicki Dunn, with Latter & Blum Inc./Realtors, said that the tax credit got a lot of people to shop for a new house, even if they didn’t plan to use the credit.
“Whether they used it or not, it made them look,” Dunn said. “I know some people that made the purchase just because of the tax credit. I also know people who weren’t going to rush into the decision just to get (the credit).”
Dunn said that she has also seen sales drop since the credit ended, but she isn’t sure if it is due to the slow summer months or to homeowners compensating for the end of the tax credit.
“I have seen houses drop their prices slowly but surely over the past few months, but I don’t know if it has anything to do with the tax credit,” she said.
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