Home buyer tax credit extension could spur sales, locals say

This townhome at Beacon court may appeal to buyers looking for their first home. It has two bedrooms, one and a half baths in 1,168 square feet and is listed with Sharon Vaugn with Coldwell Banker for $139,900. Courtesy photo



11.22.9 8000 extension Beac

This townhome at Beacon court may appeal to buyers looking for their first home. It has two bedrooms, one and a half baths in 1,168 square feet and is listed with Sharon Vaugn with Coldwell Banker for $139,900. Courtesy photo

This townhome at Beacon court may appeal to buyers looking for their first home. It has two bedrooms, one and a half baths in 1,168 square feet and is listed with Sharon Vaugn with Coldwell Banker for $139,900. Courtesy photo



11.22.9 8000 extension 1

This townhome at Beacon court may appeal to buyers looking for their first home. It has two bedrooms, one and a half baths in 1,168 square feet and is listed with Sharon Vaugn with Coldwell Banker for $139,900. Courtesy photo

Sometimes, it takes a little push to make a big financial decision. The $8,000 first-time buyer tax credit pushed quite a few tentative lookers into home ownership and helped stimulate real estate sales at a time when the industry needed all the help it could get.

“We saw a lot of first time buyers stepping up who probably would have stayed in the background,” says Brenda Bounds, a local real estate agent with Keller Williams. The combination of reduced prices, low interest rates, a huge inventory of available homes and the tax credit all combined to create one of the best scenarios in years for first-time buyers.

The success of the program led the federal government to extend the $8,000 tax credit available to first-time buyers and expand the program to include a $6,500 tax credit to existing homeowners. Now, both first-time and repeat buyers have until April 30, 2010 to buy a house or sign a binding sales contract, as long as the purchase is completed before June 30, 2010 and the buyers meet the income guidelines.

Existing homeowners who have owned a home and lived in it for five consecutive years of the past eight qualify for the $6,500 tax credit. The tax credit applies equally to those who are moving up and to those who are downsizing. For a more detailed explanation of the $6,500 credit and how existing homeowners can take advantage of it, read Nation’s Housing, the real estate column by Kenneth Harney on page 5.

“It will get people thinking, for sure,” says Patti Chamberlain, a mortgage consultant with Alpine Bank. “It should have a domino effect.”

Existing homeowners who are currently living in their first home may now be enticed into putting their property on the market so they can look for a larger second home. That could bring more of those affordable, first-time homes to the market, while helping to reduce the inventory of mid-range homes. Likewise, homeowners who are living in a larger third or fourth home may be enticed into the market with the idea of downsizing.

“The extension could help reduce foreclosures because it may get more able buyers in the market to absorb the excess inventory,” says Amy Case, home ownership coordinator with the Grand Junction Housing Authority. Case also teaches a homebuyer education class and noticed a spike in attendance as first-time buyers scrambled to take advantage of the credit prior to the announcement of the extension.

The extension gives prospective buyers who thought they’d miss the deadline a few more months to clean up their credit, establish a more solid employment history or try to find that perfect home at just the right price.

Colorado Housing and Finance Authority (CHFA) works with mortgage lenders to provide financing to many first-time buyers, creating the JumpStart Home Mortgage product earlier this year to help FHA buyers turn the $8,000 tax credit into a down payment and closing costs. Through JumpStart, buyers could take out a second mortgage equal to 3 percent of their new home’s cost. The second mortgage had a zero percent interest rate and was not due and payable until June 30, 2010, the date by which buyers should have received their tax credit. Because the government extended the tax credit program, CHFA is also extending the JumpStart program until April 30.

“Most first-time buyers can make the monthly payment but don’t have the down payment,” explains Jerilyn Martinez with CHFA. “When we created the JumpStart program, it was always intended to work with the $8,000 tax credit.”

The majority of buyers who purchased homes within the last few months in any of the Grace Homes neighborhoods of Brookwillow, River Run, Autumn Breeze or West Meadows in Montrose were first-time buyers who wanted to take advantage of the tax credit. About half of them used the CHFA JumpStart program, according to Danny Kuda, assistant sales manager. Kuda hopes to get the word out that the extension allows buyers to build a home in any of the Grace Homes subdivisions from the ground up.

“Buyers can customize the floor plan,” he says “They don’t have to use the $8,000 for remodeling. Why not build from scratch and get the home you want?”

Up to this point, the $8,000 credit has stimulated the first-time buyer’s market, creating an extra incentive for people to go from being renters to becoming homeowners. Local Realtors, lenders and others involved in the real estate and construction industry hope that the $6,500 credit will provide enough incentive to help move properties in other price ranges, or at least keep the industry healthy through the winter.

COMMENTS

Commenting is not available in this channel entry.










THE DAILY SENTINEL
734 S. Seventh St.
Grand Junction, CO 81501
970-242-5050
Editions
Subscribe to print edition
E-edition
Advertisers
Sign in to your account
Information

© 2014 Grand Junction Media, Inc.
By using this site you agree to the Visitor Agreement and the Privacy Policy