Extension is good news for Realtors

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November 6, 2009

Tax credit expected to further stabilize market

By Ken de la Bastide The Kokomo Tribune Fri Nov 06, 2009, 10:59 PM EST

Congress’ decision to extend the credit for first-time homebuyers is expected to be good news for the local real estate market.

The U.S. House and Senate voted to extend — and expand — the program until April 30. It was previously scheduled to end Nov. 30.

President Barack Obama is expected to sign the legislation this weekend.

“This is cool news,” said Kathy Harbaugh, director of the Realtors Association for Central Indiana.

She said the extension of the $8,000 credit for first-time homebuyers helps those currently in the process of purchasing a home. Harbaugh said it’s taking up to 50 days to close on a mortgage.

“The tax credit has increased market activity,” Harbaugh said.

Through mid-October, the tax credit resulted in the purchase of almost 31,000 homes in Indiana.

“Typically, December and January are the slowest months,” Harbaugh said for home sales. “That’s a real positive. It will stabilize the market. We won’t see the peaks and valleys, which should help first-quarter sales flatten out.”

Harbaugh said the second component of the legislation is offering a $6,500 tax credit to people who have resided in the same house for five years to purchase a new primary residence.

“That’s good news for our area,” she said. “People will be looking to move up or downsize.”

Harbaugh said the extension offers first-time homebuyers more options.

“They will have more time to save money for a down payment,” she said. “This is a great opportunity.”

Harbaugh said the extension will help stabilize prices of homes on the market. She said nationally 40 percent of the sales this year have been to first-time homebuyers.

The National Association of Realtors estimate the current tax credit has contributed approximately $22 billion to the general economy, and approximately 2 million people will take advantage of the tax credit this year.

Paul Wyman, owner of The Wyman Group, said the extension was anticipated by Realtors, but the expansion came as a surprise.

“This is certainly good news for our industry,” Wyman said. “We have helped quite a few people with the current program, and the extension should pick up sales.”

Wyman said the program will stabilize home values.

“These are incentives for more people to enter the market,” he said.

Rep. Joe Donnelly, D-2nd District, who co-sponsored the legislation, said it will make the dream of home ownership available to more people.

“The first-time homebuyers tax credit has boosted the housing market and helped make possible the dream of home ownership for many Americans,” Donnelly said in a press release. “Extending this tax credit is a common-sense way to continue to strengthen our housing market and, in turn, our economy. The concept from my bill that was included in this bill will allow thousands of homebuyers who enter into contracts ahead of the deadline to receive the credit, even if they are unable to close before that same deadline.”

Rep. Dan Burton, R-5th District, also voted in favor of legislation.

His spokesman, John Donnelly, said in the past Burton has sought to increase the tax credit to $15,000 and to extend the program to other than first-time buyers.

“[Burton] is a huge supporter,” Donnelly said.

• Ken de la Bastide is the Kokomo Tribune enterprise editor. He can be reached at 765-454-8580 or via e-mail at ken.delabastide@kokomotribune.com

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