Realtors: Tax credit extension will boost market

By Buck Wargo

Friday, Nov. 13, 2009 | 3 a.m.

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.