Facebook
Fark
Digg
Reddit
StumbleRealtors: Tax credit extension will boost market
Fri, Nov 13, 2009 (3 a.m.)
Sun Topics
Sun Coverage
Homebuilders and Realtors are counting an extension and expansion of a homebuyer tax credit to boost to the housing market through mid-2010.
Last week, Congress extended the $8,000 credit for first-time buyers and expanded the program to include move-up buyers in the amount of $6,500. The credit for first-time buyer was set to expire Nov. 30.
Buyers must qualify by signing a purchase agreement by April 30 and closing by June 30.
Builders had argued that the credit needed to be extended and expanded to help their struggling industry. Realtors say the tax credit kept sales strong — they increased 5.3 percent in October in part because of first-time buyers taking advantage of the credit.
“The credit has definitely impacted positively our home sales in Southern Nevada,” said Monica Caruso, Southern Nevada Home Builders Association spokeswoman. “We are usually not amenable to government intervention. However, in this case it has worked, and for an industry devastated by the economic conditions, it is a short-term boost for the industry. But what we really need to see are some long-term improvements.”
That means an economic recovery and a boost in consumer confidence, Caruso said. But she added that expanding the tax credit to include a new group of buyers should help sales.
“We have heard from sales and marketing people about buyers looking at some of these products and wished they could benefit (from the tax credit),” Caruso said. “Everyone enjoys a benefit, and it could sweeten the deal for a large category of buyers that it did not apply to.”
A concern about the expanded credit is the inability of some move-up buyers to sell their homes at the price they want.
“I think it is significant because it will help move-up people,” said Dennis Smith, Home Builders Research president. “It should make a difference. We should see a spike in activity.”
Smith won’t call the continuation of the tax credits a cure-all for the housing market. The best cure is jobs, he said.
“We still have problems with foreclosures,” Smith said. “How does this help people stay out of foreclosure? It doesn’t do anything for that.”
Rick Shelton, president-elect of the Greater Las Vegas Association of Realtors, said the tax credit has already boosted sales by as much as 300,000 nationwide and its extension and expansion should boost that total.
Adding the tax credit to the mix of low housing prices and low interest rates is a good prescription to help the economic recovery, Shelton said. It would help to extend it for a longer period, but it’s better than nothing, he said.
Shelton said another positive is the increase in the income limits for those who can qualify for the benefit. It has risen for an individual from $75,000 to $125,000 and for couples from $125,000 to $225,000.
In October, the Realtors group reported 3,535 single-family home sales, a 5.3 percent increase over September when 3,358 homes sold. Median prices rose 1 percent to $139,100, the highest since July’s $138,800.
Sales of condos and town houses fell 1 percent in October to 850, but median prices rose 6.5 percent from $65,720 to $70,000, the group reported.
It credits investors and first-time buyers for boosting demand for homes. Cash buyers accounted for 42 percent of home sales in October.
The sales of foreclosed homes declined in October, falling to 64.5 percent of the total. It was 67 percent in September.
The Realtors’ group tracks sales only on the Multiple Listing Service. It reported 20,998 homes are listed at the end of October, about 1 percent higher than September. It said 8,075 homes are listed without offers, a 2 percent increase over September.
In October 5,482 homes were new listings, an 11 percent increase over September.
Discussion: 6 comments so far…
Comments are moderated by Las Vegas Sun editors. Our goal is not to limit the discussion, but rather to elevate it. Comments should be relevant and contain no abusive language. Comments that are off-topic, vulgar, profane or include personal attacks will be removed. Full comments policy. Additionally, we now display comments from trusted commenters by default. Those wishing to become a trusted commenter need to verify their identity or sign in with Facebook Connect to tie their Facebook account to their Las Vegas Sun account. For more on this change, read our story about how it works and why we did it.
Only trusted comments are displayed on this page. Untrusted comments have expired from this story.
No trusted comments have been posted.
Post a comment
Most Popular
- Viewed
- Discussed
- E-mailed
- Superstar Whitney Houston dies at 48
- Two dead after accident in downtown Las Vegas
- Instant Analysis: Debating whether UNLV should continue series with San Diego State
- Police looking for man in white Ford Explorer
- Dining Guide: 2012 Valentine’s Day options in Las Vegas
- Color from the scene at Thomas & Mack Center: We have a wire job! Rebels win, and Louie Armstrong sings!
- Four people injured in car accident
- Blog: Justin Hawkins’ steal seals UNLV’s thrilling 65-63 victory against San Diego State
- After Nevada and Florida wins, Mitt Romney trying to prove he’s ‘severely conservative’ to CPAC base
- UNLV makes key plays down stretch to hold off San Diego State 65-63
Blogs
The Kats Report
Color from scene at Thomas & Mack: We have a wire job! Rebels win, and Louie Armstrong sings!
South Point owner Michael Gaughan's take on 'Vegas Stripped': 'I'll give it an 8' (4 Comments)
Author relishes writing the life story of ‘larger-than-life’ Oscar Goodman (3 Comments)
Elsewhere
Landowner: All roads could lead to Uxbridge casino
Revel reveals smoke-free casino opening
Cirque du Soleil show in Sands China casino to close this month
Meet the woman behind Sheldon Adelson
The Sun
Locally owned and independent for more than 50 years.
I can see why this passed, it's good politics. Sadly, it seems to be bad economics. An estimated 15% of the people who take the credit actually need it, i.e. 85% of the people would have bought homes regardless of the credit.
In other words, if 85 people would have purchased a home in the next week we can increase that number to 100 people by giving everyone an $8,000 tax credit. This means that we're spending some $53,000 per additional home purchase, which is remarkably inefficient.
On top of that, we're encouraging people who would have bought a home in the next 6-12 months to buy a home now. That in turn means that as soon as the credit ends we're going to see a nasty drought of home sales.
Now, purely as stimulus, consider the efficiency of giving home buyers $8,000. These are reasonably well off folk who will put the money toward their down payment, their move, or perhaps new items for the home (curtains, etc). Every cent put toward the down payment has almost zero stimulus effect.
Compare instead the efficiency of extending unemployment benefits. Almost 100% of this money will be spent on basic living expenses. Now that's how we get the economic engine firing.
Of course it's awful economics Scott. The .gov is so desperate to prop up consumer confidence that it wants to put a floor -- they don't care if it's an artificial floor -- under housing prices.
But all they've done is add an $8,000 surcharge on to the prices people are paying. The minute the taxpayer-funded stipend ends, how long will it take for that $8,000 to come off the values (plus another $10,000, just for fun)? I give it a couple of months. And then all of these recent buyers will be immediately underwater, just like most of the boom buyers.
This tax credit program will prove to be massive waste of taxpayer dollars. Housing prices will find their natural level, no matter how badly the .gov and the functionally insolvent lenders are trying to avoid that moment. No stopping it now.
let me guess...
now is a great time to buy...
It is not necessarily so that homebuyers will be under water once the tax credit expires. For one, once the job losses are reversed there will be that many more potential buyers for homes. Also, there a people sitting on the fence because they fear home prices have not bottomed. At any rate what is important is that when the home loans are given the documentation is there that the homebuyers can afford the mortgage. Even if they go under water the mortgages can be paid. Also, with the mortgage interest tax deduction homebuyers are still ahead. The potential problem is how much interest rates will rise in the future and also whether banks will be in a position to start lending once again.
"once the job losses are reversed"...
i won't be holding my breath.
hey, liberals...those "evil rich people" that you think are ATM's for your limp-wristed programs are the people that HIRE people and CREATE jobs.
when you take away their money = you take away jobs.
this would be good news...but , do you have to have a job to get a Home Loan ????