Real estate agents hope housing trend continues after tax credits end
Posted April 30, 2010 7:38 p.m. EDT
Updated April 30, 2010 11:14 p.m. EDT
Raleigh, N.C. — Real estate agents are hoping the housing market will continue its current pace, even after the home buyer’s tax credit expires on Friday.
“We’ve just seen a nice, good pace for the first four months of this year,” said John Hawkins, a real estate agent with Fonville Morisey.
Hawkins hopes the trend continues but admits he has some concerns.
“Some people are saying we’ve been fueled by the tax credits which has been $8,000 for first-time homebuyers and $6,500 for move-up buyers,” he said.
Congress included the temporary tax credit in the $787 billion stimulus package signed into law a month after President Barack Obama took office last year. The idea was to bring the housing market back to life. Lawmakers, after intense lobbying from the real estate industry, agreed last fall to extend it until April 30.
Nearly 1.8 million households had used the credit as of mid-February at a cost of $12.6 billion, according to the Internal Revenue Service.
To qualify, buyers must have a signed contract in hand by midnight Friday and must complete the deal by June 30.
The credit for first-time buyers is believed to be playing a bigger role in stimulating home sales this spring. Sales of new homes surged 27 percent last month from a record low a month earlier; it was the biggest monthly increase in 47 years.
Sales of previously occupied homes, meanwhile, were up nearly 7 percent in March and are expected to keep climbing.
“That generated a lot of sales that would have taken place later in the year. So in some sense, we pulled forward sales,” North Carolina State University economist Mike Walden said Friday.
Many analysts project sales will drop sharply in the second half of the year. Some expect prices to plunge as well, especially if mortgage rates rise and a wave of foreclosed homes hits the market.
“I think we will see improvement in housing sales but the rate of growth, the rate of improvement is definitely gonna be slower than we’ve seen in the last couple of months,” Walden said.
Walden expects job growth to escalate statewide but particularly in the Triangle. With low interest rates and excess inventory, he believes the housing market will benefit long term.
“Excess inventory we have is going take years to work off,” he said, adding that the housing market, including construction, will probably take three to four years to return to normal.