End to tax credit affects local home sales
Published 7:10 am Friday, July 2, 2010
The expiration of the national home buyer tax credit resulted in a drop in home sales throughout the country — and sales in Austin were no exception.
Joe Fuhrman of Fuhrman Real Estate in Austin estimated that April sales this year tripled compared with last year’s sales. That trend stopped when the home buyer tax credit program came to a halt at the end of April.
First-time home buyers who entered into housing sales agreements before April 30, 2010 qualified for a $8,000 rebate from the federal government. Repeat home buyers qualified for a $6,500 tax credit, also awarded after the finalization of the sale. While the tax credit only applied to those who entered housing sales agreements before April 30, the government allowed home buyers who finalized the deal by June 30 to qualify for the rebate. On Thursday, the House voted to extend that timeline until Sept. 30.
Fuhrman said the home buyers incentive did exactly what the federal government hoped it would do: reinvigorate the housing market.
“It did stimulate the economy in Austin,” Fuhrman said.
“People took advantage of it in Austin. It did help us.”
Since the time the deal was taken off the table for home buyers, Fuhrman said, people have been reluctant to spend that kind of money, considering the market is still recovering.
But that’s not a perspective shared by all Austin realtors.
Mike Steichen, broker with Steichen Real Estate, did see a slight drop in sales when the tax credit ended, but he said the sales keep coming.
“Things did slow down, but they didn’t die by any means,” he said.
Steichen cites record low interest rates, along with a great climate for home buyers, as additional forces which drove a good start to the 2010 year for realtors.
“To sweeten the pie, interest rates are lower than they’ve been in 50 years,” he said. “It’s a buyer’s market, and buyers are having a lot of fun. They’re getting some fantastic buys, but sellers re really having to sharpen their pencils and lower their prices.”
Charlie Fawver, a real estate broker with Fawver Agency, said his agency undoubtedly saw an influx of home buyers in the months leading up to the April 30 deadline, but he doesn’t feel those customers were drawn to purchase a home because of the added stimulus bonus. Instead, he believes people who would otherwise have purchased a home throughout the year were given an added incentive to seal the deal before May.
“It created an urgency for people to act sooner than they may have acted before,” he said. “It did not create new buyers, it only probably stimulated t hem to buy sooner than they might have.”
In the end, he thinks his yearly sales will be comparable to years past — they just won’t be as spread out.
“If you sell 100 houses through a one year period, you sell about eight per month. If you sell half of those in two months, then you sell a lot less during the rest of the months,” he said. “I’m not sure it created additional sales.”
Fawver also noted that those who came forth to buy homes during the time of the home buyers tax credit had to be pre-approved based on the original cost of the home, excluding the reduction based on the stimulus rebate credit.
In terms of the recent move to extend the finalization deadline to Sept. 30, area realtors say it won’t have an impact on the housing market in Austin, as it won’t be a make or break deal for those already in the process of purchasing a home. Rather, it will only allow home buyers who entered purchase agreement before April 30 to qualify for the rebate on any sale that is finalized by Sept. 30.
“I don’t believe that we had anyone in the pipeline here whom would have been backing out of any agreement because of that,” Fawver said. “I would say that would be a rare situation.”