People planning to claim the $8,000 tax credit for first-time homebuyers have limited time left to purchase a home.
The tax credit was part of the $787 billion economic stimulus bill that President Barack Obama signed into law in February. It is available for homes purchased on or after Jan. 1 of this year and before Dec. 1. It is unknown whether the tax credit will be extended.
Ethan Nobles of the Arkansas Realtors Association said homes in the $140,000 and under range are selling well everywhere because of the tax credit.
“That tax credit expires at midnight on Nov. 30,” he said. “So if it takes 30 days to find a house and another 30 days to close on it … If people start looking for a home much past the first of October, they might miss the deadline on the credit.”
The closing date is what determines whether the buyer meets the deadline, he added.
“If homes are harder to come by in that price range, it might take 30 days (to find one). That is the one price range that is just booming,” he said.
Randy Herrold, president of the Faulkner County Board of Realtors, said the $140,000 and under price range always sells well in Faulkner County because of the abundance of young professionals in the area.
“It’s sometimes tough to find houses like that. It’s a very tough market price point,” he said.
For builders, he said, “By the time you buy your lot and do all the subdivision stuff, it’s hard to keep it lower-end.”
Herrold continued, “The ones who are able to get financed, who have a little money in-pocket, it’s wide open to those potential buyers. The way things have gone … because of gas being higher, a lot of entry-level buyers have used a lot of credit to sustain their standard of living, whether it’s above their standard or where it needs to be. A lot of people have additional credit debt and don’t have a lot of cash.”
He noted the homebuyer credit is “not out there to get you into a home, it gives you the benefit afterwards.
“Those that do have 3 to 3-and-a-half percent they can put down, those folks have a great opportunity to get a house and get out of renting, which would be a great advantage for them, to be going toward their equity versus someone else’s equity.”
Nobles said as fall draws near, real estate professionals will have a question in their mind about the health of the market. He said if the price range of $140,000 and below should hold, it will be a good sign. Historically, he said, when the market improves, it does so from the bottom up.
“People who had homes in the lower price ranges generally trade up. We hope that continues and everything gets going again,” Nobles said, although he was not prepared to make predictions, he added.
“Every May through August, home sales are strong. The question is, will the momentum carry through the fall. Then you can talk about recovery.”
For more information about the first-time homebuyer credit, go to http://www.federalhousingtaxcredit.com/2009/glance.php or http://www.irs.gov/newsroom/article/0,,id=204671,00.html.
(Staff writer Rachel Parker Dickerson can be reached by e-mail at firstname.lastname@example.org or by phone at 505-1277. Send us your news at www.thecabin.net/submit)