Tax credit has mixed results

SANDPOINT — A federal tax credit for home buyers that expires at midnight helped move real estate in the short term, but probably will not jump start the market, local agents said.

The tax credit that provided first-time home buyers with an $8,000 incentive to purchase a house prompted additional sales this spring, giving a needed push to consumers who were concerned about buying a house in a down economy, said Teresa Albertson, an agent at Sandpoint Realty.

“I think after the first of the year, our phones were busier,” Albertson said. “We’ve been showing a lot more properties. It feels a lot busier, there is a lot more activity going on, everybody has got deals in the drawer.”

The tax credit was initiated last year and it was extended to April 30.  Home buyers with a binding sales contract, however, have until June 30 to close and still qualify for the exemption.

Once the credit expires, agents think the market could once again flatten, but they hope the momentum will continue.

“I think that urgency is going to go away,” Albertson said.  “On a whole, I think things are starting to shift. People are getting back in the game.”

Rich Curtis, owner and broker of Exit Realty Sandpoint, said the tax credit helped push sales, stimulating a flat market.

“It got people off the fence and got them to move,” Curtis said. “It seemed to work pretty well, it stimulated the market, it was a great deal.”

Because of a market flooded with foreclosures, auctions and short sales, prices will likely stay low, he said.

“Until all the foreclosures are absorbed, I don’t see a turn around in market place,” Curtis said.

Matt Linscott, of Lana Kay Realty, agrees that short sales will adversely affect the market.

“There’s just enough of those distressed short sales that it’s still affecting the whole balance of the market,” Linscott said. “I  think once those distressed properties leave the books, we’ll see a little bit of a bounce, a little bit of a rebound.”

When that will happen is anyone’s guess.

“It’s hard to tell,” Linscott said.

The high number of distressed properties will keep prices down, influencing the market more than the sunset of the tax credit, he said.

Curtis agrees.

“Getting them moved,” he said, “getting them off the books, will continue to drive prices in a downward motion.”

Realtors who saw the jump in shoppers this spring hope the federal government is considering another extension of the tax credit, although it has not sent any signs to encourage the notion.

They are keeping their fingers crossed.

“There are always rumors they will extend it,” Linscott said.

He is not alone.

“It would have been nice if they extended it,” Curtis said.

The credit that expires today gave first time home buyers a $8,000 incentive, and repeat home buyers a $6,500 credit for purchasing during the window.

The slumped market has encouraged others to probe prices, with or without the credit.

“We still have buyers looking at pieces of property,” Linscott said. “A lot are looking for that great deal. They are not afraid to low ball an offer.”