Real estate market waits for word on first-time home buyer tax credit extension

Activity remains high in the local real estate market as first-time buyers race toward signing a deal before the $8,000 federal tax credit expires on Dec. 1.

While everyone in the real estate industry hopes the credit is extended beyond that deadline, no one is taking that possibility for granted.

The latest news out of Washington last week saw a proposal by some U.S. senators to extend the credit to June 30 get bundled with a bill extending unemployment benefits. Also on the table is an expansion of the credit beyond just first-time buyers and a higher ceiling on income limits, doubling from $150,000 to $300,000.

In Congress, the Ways and Means Committee is working on an omnibus tax extender package, but it is not ready to go to the House floor. It could ready by mid-November, according to a Congressional staffer.

Unclear is how much support it will get.

“I appreciate the stimulative effect of the first-time homebuyer tax credit,” said U.S. Rep. John Dingell in a written statement responding to my request for information.

“While it’s done a good job of helping the real estate market recover, I think the more pressing housing-related problem for Southeast Michigan is its rash of foreclosures. In terms of helping people in my District, I would be very interested in seeing legislation meant to help address this issue.”

Nationally, over 200,000 homes have been sold to buyers using the tax credit. And the National Association of Home Builders estimates that number could grow by 383,000 if the credit is both extended and expanded.

That move would cost the government an estimated at $16.7 billion.

Meanwhile, the reason that local real estate agents want the extension is obvious: The tax credit is generating sales.

“Pending sales are at virtually near-record levels (for homes) below $100,000,” said Jeff Stabnau, sales manager at Ann Arbor’s Real Estate One office.

Ann Arbor Area Board of Realtor listings on Oct. 16 showed 146 active listings of homes and condos in Washtenaw County priced at $100,000 or less - with 11 of those in Ann Arbor - and an additional 49 under contract.

Stabnau said local sales “have put a significant dent in the number of potential first-time homebuyers” that would qualify for a purchase.

Any expansion to the program would give the market hope that the average price of the credit-generated sales would target homes up to $200,000 - unlocking the move-up market.

Lobbying efforts are in high gear, ranging from local Realtors and lenders all the way up to state and national professional groups.

And agents are still working extra hours to ensure that any client who wants to buy a home with tax credit gets to do that.

Prospective buyers need to get a deal in writing by the end of October, Stabnau said.
“And make sure you’ve got your financing in place with someone who can get the job done,” he said.

Realistically, about two weeks remain to sign a purchase agreement for anyone hoping to close on a purchase before the existing deadline.

“We think people will be coming down to the wire,” Stabnau said. “… We’re doing everything we can to get these deals done.”

Paula Gardner is the business news director for AnnArbor.com. She can be reached by email or (734) 302-1715, or follow PaulaGardner on Twitter.