Tax Credit Spurs Home Sales
As a critical tax credit deadline looms, real estate agents and first-time home buyers are guardedly optimistic about a possible upturn in the real estate market.
Realtors interviewed by The Pilot Thursday said this is the best time in ages to buy a home because prices are good and offerings are numerous.
In addition to the federal first-time home-buyer tax credit, the threat of a possible rise in interest rates is also fueling an increase in homes sales.
The increase has been especially noticeable in the past two months, according to Tom Kowal, executive vice president of the Pinehurst-Southern Pines Association of Realtors. The most obvious increase is among people buying homes for the first time who are eligible for a federal tax credit.
Moore County recorded 71 home sales in March, compared with 50 units in the same month last year, according to a report from the Pinehurst-Southern Pines association. Average sale price in March was $258,300.
"It's a good trend, not an overwhelming trend in our area, but it certainly has helped," said Kay Beran, president of Prudential Gouger O'Neal & Saunders Real Estate. "It has sealed the deal for many sellers and buyers nationwide as well as here."
Beran said the outlook is good for the trend to continue and actually pick up even more. She cited a national survey by Prudential Real Estate and Relocation Services Inc. showing that consumers believe this is a good time to buy and are confident home prices will rise.
But time is running out on federal legislation passed in 2008 offering up to an $8,000 tax credit for people buying a new home for the first time or buying a home if they have not owned one in the previous three years.
In 2009, Congress expanded the credit to include up to $6,500 to eligible taxpayers who offer proof of home ownership for five consecutive years during the eight-year period ending on the purchase date of the new home.
The deadline to claim the credit expires at midnight today. That's the deadline to execute a binding contract for the purchase. But eligible home buyers have until June 30 to close the deal.
Beran and other Realtors have been cautioning buyers that this is a federal tax credit, which means plenty of red tape. She said everyone must make sure all details are complete and accurate in order to comply with the tax credit law.
"Our next hurdle is the guidelines," Beran said.
Beran said Thursday that she had two such contracts on her desk ready for completion in plenty of time for the deadline.
Realtor Pam Hill with Coldwell Bank United Realty had an equally cautious but optimistic outlook. She also had contracts ready for completion on her desk.
"I do think this credit has helped the market," Hill said.
But the federal tax credit is not the only driving force pushing sales these days. Hill pointed to hints that interest rates will soon begin rising, a factor that is encouraging some who are "on the fence" to make decisions to go ahead and buy now before rates climb.
"It's like cream on top of the cake," she said. "If you don't have cake, it doesn't matter."
The unfortunate thing for sellers is that many are being forced to lower their prices dramatically, some at heavy losses, to speed up sales. Still, she said everyone seems to understand the situation and is doing what it takes to move sales.
Hill said Moore County is somewhat sheltered from some of the major problems that have precipitated heavy losses in other places. This area has long been an attraction to military families, and there are numerous nice homes available for sale here.
"This is a great place to live," Hill said. "There is a lot to choose from right now."
Kowal said local real estate firms have experienced an increase in home buying in the last six months. Nationally, 44 percent of the homes sold in March were to first-time home buyers, a clear indication that they are taking advantage of the tax credit.
"Sales have increased," Kowal said. "There is an opportunity here, and people are taking advantage of it."
Kowal said that in the first quarter of this year, the average sale price here climbed by 6 percent and the number of units sold climbed by 32 percent.
The Realtors all emphasized economic conditions as the most important factor for buyers these days. Many are uncertain about their unemployment status, and there is a wariness about the overall economy which has suffered from the mortgage crisis nationwide.
These concerns kept many possible buyers on the fence. Now many are going ahead and taking advantage of the tax credit.
The National Association of Realtors reported that existing home sales rose 6.8 percent to a seasonally adjusted annual rate of 5.35 million units nationally in March, up from 5.01 million in February. Such sales are identified as completed transactions that include single-family, town homes, condominiums and cooperatives.
Contact Florence Gilkeson by e-mail at email@example.com.
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