RISMEDIA, February 12, 2010%u2014(MCT)%u2014Liv Mansfield is racing the clock, hoping to find and settle, or at least sign a purchase agreement, on a townhouse before the $6,500 tax credit for qualified repeat home buyers expires April 30, 2010.
While the credit is not as important as staying in the Wallingford school district, where her younger daughter will enter sixth grade next fall, Mansfield says it will help make expenses associated with the move %u2018a wash.%u2019 %u201CIt will help with moving costs, and with getting this house ready for sale,%u201D said Mansfield, who has lived in the five-bedroom split-level Colonial she bought with her former husband nine years ago.
The house, which she says is far larger than what %u201Ctwo people and a small dog need,%u201D will list for under $525,000 and heads for the market Feb. 15, 2010.
Current homeowners buying a house between Nov. 7, 2009, and April 30 and who have used the home being sold or vacated as a principal residence for five consecutive years within the last eight can qualify for the $6,500. It seems less is known about the repeat buyer credit. This incentive was added when the original $8,000 tax credit for qualified first-time buyers, which expired Nov. 30, was extended.
Houses purchased for $800,000 or less are eligible for repeat buyers. Single buyers with incomes up to $125,000 and married couples up to $225,000 may receive the maximum tax credit for both repeat and first-time purchases. The credit decreases for buyers who earn between $125,000 and $145,000 for single buyers and between $225,000 and $245,000 for home buyers filing jointly. The amount of the tax credit decreases as his/her income approaches the maximum limit. Buyers earning more than the maximum are not eligible for the credit. If a binding written contract to purchase is in effect April 30, the purchaser will have until July 1, 2010 to close.
The 2009 credit for first-timers helped jump-start the sagging home market in the summer and fall, data show. Walt Molony, a National Association of Realtors (NAR) spokesman, said two million existing-home sales in 2009 could be attributed to the $8,000 first-time buyer credit. Although it is too early to measure the credit%u2019s effect on sales so far this year, Molony said NAR chief economist Lawrence Yun believes it will add 1.5 million sales to the tally.
The repeat-buyer credit was added to appease builders, who said the original did not offer enough time to purchasers of new houses, which take at least six months to build, to close on them. New homes accounted for only 7% of the tax-credit-based sales, Molony said.
The National Association of Homebuilders%u2019 Donna Reichle said, %u201CWe hear builders saying they are getting inquiries, but that%u2019s all so far. According to our economists, it%u2019s way too early,%u201D Reichle said. %u201CIf you look back at the passage of the original $8,000 credit and impact on housing starts, it took a couple of months, and that was in the spring as well.%u201D
Moody%u2019s Economy.com chief economist Mark Zandi says the credit will boost sales %u201Cmodestly,%u201D however, by 300,000, with one-third trade-up buyers. %u201CI don%u2019t expect the credit to be extended again,%u201D Zandi said. %u201CEach time it is extended, it becomes less effective and thus more costly.%u201D
David Krieger, senior vice president and general manager of Coldwell Banker Preferred in Philadelphia, says he believes that %u201Ca very large increase in our listing inventory in January is a result of the $6,500 credit.%u201D Still, the $8,000 first-time credit remains the chief reason his company%u2019s home sales were 33% higher last month than in January 2009, he said.
Typically, repeat buyers are better off financially than first-timers, so a lot of repeat buyers realize from the start they don%u2019t qualify for the credit, Weichert Realtors agent Alec Schwartz said. %u201CWhat they do realize, and what is getting more sellers to list, is that they understand that there are plenty of first-time buyers who qualify for the $8,000 credit out there, and they have a much better chance of selling their house and buying a new one than before,%u201D said Schwartz, Liv Mansfield%u2019s agent.
This is also true in the region%u2019s new-home market, said Wayne Norris, regional sales manager for Hanley Wood Market Intelligence. %u201CBuilders have experienced increased activity in recent months%u201D attributable to the $6,500 credit and %u201Cthe fact that many potential buyers were able to sell their houses%u201D to those taking advantage of the first-time buyer credit,%u201D he said. The sense of urgency to make the tax-credit deadline and fears of rising interest rates will push new-home sales higher in the spring, Norris said.
(c) 2010, The Philadelphia Inquirer.
Distributed by McClatchy-Tribune Information Services.
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