The extension of the first-time homebuyer tax credit is bringing about much-needed activity in the local real estate market. “It’s certainly been a positive factor in creating some activity early on,” says Janet McAfee agent Katie Kirk. “I’ve seen first-time homebuyers who may have been on the fence, but because of the extension, are now moving forward and making a purchase this spring.”
The $8,000 tax credit for those purchasing their first home has been extended to April 30. The program has also expanded to include a $6,500 credit to existing homeowners who want to move, according to Kirk. “First-time homebuyers are those who have not owned a principal residence for three years prior to the move. Repeat homebuyers have owned a house for five consecutive years out of the last eight years.” The incentive comes with eligibility requirements, she adds, including income and type of home. “For individuals, the limit is $125,000; for married couples, the combined income limit is $225,000,” Kirk says, noting that all properties listed at less than $800,000 qualify, whether it’s new construction or an existing home, a townhouse or condominium, just as long as the home will be used as the buyer’s principal residence. To learn more about the program, she recommends visiting the Web site federalhousingtaxcredit.com. “It’s very user-friendly and lists the 24 questions most people have about the tax credit,” she says.
It’s important to note that the April 30 deadline means home purchases need to have a contract by that date, with closing to take place by June 30. “Having the time difference between contract and closing is really good for both buyer and seller,” says agent Elizabeth St. Cin of Laura McCarthy. “It’s stressful enough to purchase or sell a home, so this arrangement is more cognizant of people’s timelines.”
In addition to the tax credit, St. Cin notes that low interest rates are still in effect. “It really doesn’t get any better—it’s a win-win situation,” she says. St. Cin points out that a majority of first-time buyers purchase homes under $200,000, while repeat buyers look in the $250,000 to $500,000 range. “Some of the repeat buyers might not meet the eligibility criteria for the tax credit, but there’s a pool of first-time buyers out there and the repeat buyers are realizing they have a better opportunity to sell their small home today rather than tomorrow.”
Coldwell Banker Premier Group agent Kim Carney, who specializes in high-end properties, says that while many of her clients don’t qualify for the tax credit, the activity it has generated trickles up. She says homes ‘priced right’ in the $500,000 to $1 million price are selling well. “There are a lot of buyers looking at that price range, and they care about getting a good deal—and a good house,” she says. “I had a client buy a home last month for $893,000; the sellers bought it five years ago for $890,000.”
Carney says it’s those types of homes that are getting a lot of interest in the upper-end market. “The ones that are coming in lately are flying—there are just not that many good ones,” she says. “The tax credit has definitely stimulated the market. When houses are moving, people assume everything is moving—it’s all about perception.”