Realtors counting on homebuyer tax credit

By Buck Wargo

Friday, Oct. 16, 2009 | 3 a.m.

Las Vegas home sales traditionally slump at the end of the year as people wait until the spring to consider buying, and analysts are wondering how strong the market will be as the holidays and 2010 approach.

But the focus these days is more on Washington than on Las Vegas for what the future holds.

Congress is debating whether to extend the $8,000 tax credit for first-time homebuyers that expires Nov. 30. The credit has bolstered sales and likely will be extended, analysts said.

But Congress is considering making the credit available to additional buyers — a move that could boost the housing market.

“It would certainly be positive, and we really need all the help we can get for the consumers to get into a home whether it is a resale or brand-new home,” said Irene Porter, executive director of the Southern Nevada Home Builders Association. “I think it is important to extend it to everyone and not just first-timers. There are many families who have owned a house in the last three years who would want to take advantage of it. If it was extended, it could be an important factor in the housing recovery.”

The Greater Las Vegas Association of Realtors said the tax credit spurred people to buy before the deadline, helping Las Vegas housing sales to bounce back in September after tailing off in August.

The Realtors reported the 3,358 home sales in September were 4 percent higher than August.

The median price of $138,000 was 1.8 percent higher than August’s $135,500.

The increase in price may be because of a decline in inventory, analysts said.

Foreclosures made up 67 percent of sales in September, down from 71 percent in August. At the end of September 20,801 homes were listed, but only 7,909 didn’t have offers. That’s 8 percent lower than August, according to the association.

“We think the inventory could decline even further by the end of the year,” said Paul Bell, a Realtor with Prudential Americana Group and an association board member. He said procedures for short sales are being streamlined by the lending industry, and that should help deals close.

Bell said extending the tax credit to other buyers would boost the market.

“That could help out the upper end of the market in particular because there is a need to offer an incentive for higher-income people who are interested in buying higher-priced homes,” Bell said.

The average price of homes sold in September was $167,911, 2 percent higher than August.

Despite Bell’s optimism about the housing market, analysts are raising concerns.

John Burns of John Burns Real Estate Consulting said a massive number of homes are in the foreclosure process and will certainly drive home prices down even further when they are sold.

“For a number of reasons, banks have not been aggressively taking title to homes and selling them, which has resulted in very few distressed sales in comparison to the actual level of distress in the market,” Burns said.

This delay in the foreclosure sales, along with historically low mortgage rates and the $8,000 tax credit has stabilized the housing market for now, said Burns who added 10 percent of the nation’s homeowners are delinquent and defaults grow at a rate of 300,000 a month.

“Demand needs to continue to be stimulated to bring down supply, particularly while the country continues to lose jobs,” Burns said. “Without continued government intervention, home prices will plummet, banks will continue to lose money, and the economy has virtually no chance of increasing overall employment in 2010.”

Dennis Smith, president of Home Builders Research, said he expects fourth-quarter sales to fall this year because of the holidays.

Judging where the market is heading won’t occur until the end of February when the 2010 home-buying seasons kicks off, Smith said.

“If we don’t see a positive response from extending the tax credit by then, it is going to be a long year in terms of housing,” Smith said.

Smith said his concern is the rising unemployment rate and its effect on the housing market’s recovery.

“Jobs are the key,” Smith said. “You can try and analyze this to death, but when employment improves, confidence improves, and lenders open their doors again.”