Friday, Nov. 06, 2009

Realtors hold high hopes for more sales

President Obama is expected today to sign a bill extending and expanding the first time home buyer tax credit, which local Realtors say will continue to boost sales and help improve the housing market.

"What I'm hoping is this will be a bridge" to a real estate market that doesn't need a credit to sustain itself, said Steven Neeves, government affairs director of the Coastal Carolinas Association of Realtors.

On Thursday, the U.S. House of Representatives passed the bill to extend the tax credit through April 30 and add a $6,500 credit for most people who buy a new primary residence. People who have owned a home for at least five consecutive years in the past eight years are eligible for the $6,500 credit, and people who have not owned a home in the past three years are considered first-time buyers. Individuals must earn less than $125,000 to qualify, and couples must earn less than $225,000.

"We feel it's been a big part of the market making a turn in the last few months," said Neeves.

Critics question whether the credit has actually increased sales or has just rewarded people who were going to purchase a home anyway.

In September, single-family home sales were up 15 percent, and condominium sales were up 14 percent, compared with the same month a year ago, according to the Multiple Listing Service. September was the Grand Strand's fourth month of increases in at least one sector of the real estate market.

Rachel Broadhurst of Century 21 Broadhurst and Associates said the extension will be a relief for several first-time home buyers the company is working with who may not have been able to close by the initial Nov. 30 expiration date.

Broadhurst and others also are excited about the expansion of the tax credit beyond the first-time buyer.

"That opens the door to so many additional people."

The previous credit had a limited impact on her business, but she expects the expanded credit will have a broader effect, Broadhurst said.

"I think there is a lot of pent-up demand for people who want to buy real estate, they're just waiting for the opportunity to come down off the fence, and I think this additional benefit is really going to help those," said Rod Smith, of Coldwell Banker Chicora.

Smith said the first-time home buyer tax credit mostly increased sales of homes costing less than $200,000 and that the expansion to other buyers may result in a rise in purchases in higher price ranges.

Local builders are hoping extension leads to a reduction of inventory and increased demand for new homes.

"At this point, everything helps, and the more people we engage that want to build and want to buy homes, the better we are overall," said Fred Coyne, the president of the Horry Georgetown Home Builders Association.

Critics say the credit is an expensive program and may not truly increase demand.

"It might have gotten people in the door, but it might have had only a very marginal effect," said Roberton Williams, a senior fellow at the Tax Policy Center. "The bigger question is, what effect does it have on the market as a whole?"

The real problem in the housing market is the excess supply, and the goal was to help reduce that supply, he said. There is little evidence to show if the tax credit has motivated buyers that would not have otherwise purchased a home, Williams said.

There will likely be more foreclosures as unemployment continues to rise as more people lose their jobs, and the stimulus should be used to help those people stay in their homes, Williams said.

Tom Maeser, a research economist for the Coastal Carolinas Association of Realtors, said the impact of the credit is difficult to measure but that it has helped the Grand Strand real estate market.

Without the extension, the housing market likely would have dipped, reversing several months of increases in sales, Maeser said.

He said the home buyer's ability to get a loan from a lender to purchase a home continues to limit improvement in the real estate market.

Maeser said he'd rather see housing stimulus dollars "impact their ability to get really good solid financing in place rather than just a tax credit."