The homebuyer tax credit faded away Friday night with a whimper in most markets and a bang in just a few, according to reports from across the county.
Many real estate agents hustled their clients through the process of making an offer, but few were last minute deals brought on by the end of the credit. Most deals had been underway for weeks and buyers struggled to get them done before the deadline.
The first-time buyer tax credit has existed in one form or another since April 8, 2008; it was enacted during the Bush Administration, increased slightly in the stimulus legislation in early 2009 and was credited with creating a spike in sales last fall when it almost expired. Instead, Congress extended and expanded last November to include existing home owners.
First-time buyers are eligible for a credit up to $8,000 and buyers who already own a home can get up to $6500 if they had to have their offer accepted by buyer by midnight, April 30 and they must close by July 1 to qualify.
In its final days, the credit turned out not to be the potent motivator many expected.
Monika McGillicuddy of Prudential Verani in Hampstead, New Hampshire, president of the New Hampshire Association of Realtors, said the tax credit has not been the deciding factor when people are considering whether to buy a home.
“I have buyers I’m working with who have come out point blank who would qualify for the credit, and they said they are not going to let the potential of that credit rush them into going into debt for a $300,000 house,” she said.
Karl Lee, the President of the Santa Clara County Association of Realtors, does not think the credit expiring will slow housing sales.
“Buyers are more interested in low prices and the low interest rates; there is more concern that interest rates will inch up and prices are already going up,” he told KGO-TV.
In Yakima, Washington, agents reported strong sales activity in the last few weeks, but that activity tapered off by Friday.
Some potential buyers stayed away from the credit, choosing instead to take the time to find the right home, said Moriet Miketa, assistant manager for Prudential Almon Realty in Yakima.
“They didn’t want to jump in for the sake of the tax credit(s),” she said.
Some New Hampshire Realtors said they saw a rush of prospective buyers leading up to Friday’s deadline, hoping to get a home under contract before the tax credit expired.
“I’ve seen some of the agents in my office in the last couple of weeks who were hectic in getting contracts in, mostly for first-time homebuyers,” said Doug Charnley, a Realtor and managing broker at the Bean Group in Derry.
Both buyers and sellers, he said, were keenly aware that the tax credit was ending. And many sellers with a home in the price range of a first-time homebuyer have been concerned that finding a buyer after the deadline might be more difficult, he said.
However, in some markets, the final hours of the credit were livelier. Agents in Fargo, North Dakota scheduled signings until midnight and one Minneapolis Realtor stayed up for 36 hours to service clients.
“There’s definitely been a rush,” said Jill Jonason, a Realty 2000 agent in Fargo.
“I have people that called (Thursday) that said, ‘I want to still get in on that tax credit,’ ” said Peggy Isakson, president of the Fargo Moorhead Area Association of Realtors.
Isakson said one client called her Coldwell Banker line on Thursday, asking to see a house for the second time on Friday. But the seller’s husband was out of town and unreachable by phone until Sunday.
“So we can’t make it happen … because there’s no way we’d be able to get both signatures on it by midnight,” she said.
For thousands of real estate professionals, the deadline made for a hectic day. In Baltimore, Century 21 agent David Orso was at buyer’s home at 7:30 in the morning for a contract signing. Then he moved on to another settlement to close a deal signed earlier. When the he arrived in Brooklyn Park at lunchtime to show another buyer several homes on the market, he had another settlement still to come.
“I said to him while I was signing my life away, ‘Did you get any sleep last night?’ “said Judith McCarthy, his 7:30 appointment, who was hoping to get the repeat-buyer credit. “He said, ‘Actually, no, I had to get all these papers prepared for today.’ ”
The day also witnesses last minute negotiating strategies as some buyers tried to take advantage of the pending demise of the credit.
In Minnesota, Edina Realty agent Kevin Sperle received offers on two different listings that he believes were “intentionally low, to squeeze the seller a bit.” But his sellers aren’t biting either. With interest rates still low and home affordability high, he’s advising his sellers to wait.
At the end of the day, the best news was that a lot of serious buyers aren’t fazed by the end of the credit.
In Michigan, Scott Larkins, 35, a telecommunications specialist, is a move-up buyer who wasn’t able to find the right house in time to take advantage of the $6,500 credit. He closed on the sale of his Troy home on Friday to a first-time homebuyer who will receive the $8,000 tax credit.
“The tax credit is nice, but when you are looking at a 15- or 20-year decision it is just not worth compromising over money that isn’t ours to begin with,” he said. “We had gotten close a couple of times this week. What we didn’t want to do is go to a closing and feel reluctant about it,” he told the Detroit Free-Press.