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Has the $8,000 First Time Home Buyer Made a Difference in YOUR Housing Market?

The BIG, BIG, BIG Question: Has the $8,000 First Time Home Buyer Made a Difference in YOUR Housing Market?

There are continued discussions about the extension of First Time Home Buyer $8,000 Tax Credit. This tax credit is offered by President Obama's job and recovery plan in hopes to stimulate the economy. The current plan is set to expire November 30 2009.

Although it is not certain that this bill will be extended, most Americans feel that in all likelihood, that it would. However, one should never take this as a certainty and get disappointed if it would not be extended.

The First Time Home Buyer $8,000 tax credit has been approved and extended for military personnel until November 30 2010 (1-year extension). Active military personnel (served on active duty for at least 90 days) qualifies for this Service Members Home Ownership Act of 2009.

As the dateline drawing near, Congress has submitted several proposals for extension.

Senator Ben Cardin (D-MD) introduced S.1678 to extend the $8,000 first time home buyer tax credit to June 1, 2010.

Senator Johnny Isakson (R-GA) introduces S.1230 to extend the tax credit until November 30, 2010 and expand the tax credit to $15,000 to include all home buyers.

Where all this would stand is still up for a debate.

Has the $8,000 First Time Home Buyer Make a REAL Difference in the Housing Market?

The answer for me is Yes and No. The first time home buyer market has definitely soared because of the tax credit, especially for the Frisco TX housing market less than $300K. The $300K market and up continues to be stagnant. There was an initial intention for when first time home buyers enter the housing market, the Sellers of these homes would move up, and overall stimulate the overall housing market. Everyone wins! However, it is my opinion that this goal was not achieved, at least not in the greater Frisco TX area.

Happy First Time Home Buyer in Plano TX The Frisco TX market continues to flood with foreclosure and short sale inventories. The good thing is that these inventories are moving, hence the banks are not stuck with these portfolios. Many Sellers of these "first-time" homes are selling because they are in financial difficulties due to job loss, and those who do not need to sell now are not doing it for fear of near-future unemployment. The rental markets are not growing proportionally because many of these homeowners moved in with families, hence the rental market has not grown like it should.

My first time home buyers in and around the greater Frisco TX area are extremely grateful for the tax credit. I continually have lots of discussion with new clients about needing to purchase before November 30 dateline. Hence, if this credit is extended, many more will be able to enjoy this generous tax credit.

In the past, I was in favor for this tax credit extension. I still stand my ground. But if there is a better way, I will be open to look at my options. In the end, I want to put my American hat on to help overall "America" and not just my pocketbook. Somehow, the focus should be placed on Employment rather than the Housing market. When employment is stable, everyone buys anything. Not just houses.

Hey, but what do I know? I only know how to sell houses!

Has the $8,000 first time home buyer tax credit helped your overall housing market? Share your thoughts so collectively, America can do what's best for her.

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Loreena Yeo
Realtor®/ Broker of 3:16 team REALTY
(214) 783-2210
loreena@loreenayeo.com

Super-serving Frisco, Plano, Dallas, McKinney, Allen, Little Elm, Prosper, Celina, Richardson, Dallas M-Streets, Dallas White Rock Lake area communities and other surrounding areas.

Copyright © 2009 by Loreena Yeo (3:16 team REALTY).
Originally Posted on Effects of First-Time Home Buyer $8,000 Tax Credit in the greater Frisco TX area

Posted by Loreena Yeo - Broker|Realtor(R) of www.Frisco-TX-Homes.com (214) 783-2210 on 10/22/2009 01:38 PM

Comments (43)

Effects of First Time Home Buyer $8000 Tax Credit in the Home Buying Channel

first time home buyer 8000 tax credit

Originally posted at: faithfully frisco tx homes for sale: Has the $8,000 First Time Home Buyer Made a Difference in YOUR Housing Market?

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43 Comments on Has the $8,000 First Time Home Buyer Made a Difference in YOUR Housing Market?

OCT

I don't believe that it's made that much difference. We'll see. Folks are buying now rather than next year.

For me...no. It has increased TRAFFIC but not number of buyers/sales for me. the ones who want it seem to not qualify... still have credit issues.

Not significantly. When people are scared of their job security and concerned about potential price drops they dont think of 8k as real money. The public is also not that educated and do not fully understand what a tax credit is, and how it works.. and in many cases they dont even know it is available.

It has been my experience (for the past 20+yrs) that the one type of buyer that is always there is the first time buyer. There is always some one that is looking for the american dream of their first home.

For me YES !

I believe it's 75% of my FTBs are gettig the credit (the others earned too much $$), and these were on the fence from the year before.

Would they have bought eventually ? probably, but they may not have bought this year, and now is better than later for Realtors who need to put food on the table today !

Cheers Loreena !

Sheldon

PS: Nice picture in your post :o)

Loreena, two of my listings sold at the end of September. Both are using the first time homebuyers credit. We've seen a lot of it being used on properties priced under $200k.

Connie - Did the homeowners of these properties move up and stimulated the move up market?

Loreena

I feel has had a positive impact on the market and has helped to reduce the inventories.

Good luck and success.

Lou Ludwig

Everyone I've been working with lately (with the exception of one gentleman) are first time homebuyers. I've been fortunate that they have good credit and can actually buy homes, so it has certainly been good for my personal cash flow. Properties under $200k are moving well in Birmingham too.

I have not been able to generate interest in even ONE buyer! There was only one guy who expressed a mild interest, but then he never returned our calls when the FHA mortgage and I tried to reach him. He had the ability to buy, and would have benefited from the program, but he just wasn't motivated.

It has worked very well in the Denver market.

Loreena, I have helped a lot of first time buyers get in homes that were elgible for the tax credit but I'm with Lenn they are just buying now rather than later. I think all of them would have bought eventually.

Yes it has had an impact, I can count 2 sellers that bennifited and a buyer I helped this fall.

OCT

Personally, it did not make a big difference in my business because I work mainly with investors. However, we have sold many homes on the flip side to FHA buyers. Incentives do help people get off the fence.

It has definitely had a huge impact in my business as lot's of buyers have taken advantage of the tax credit. But the real question is how many of these buyers would have purchased a home anyway. I do think some of our buyers were motivated to move up their timeline in order to qualify, but then we're really just borrowing tomorrow's buyers for today.

In terms of overall impact, the theory has always been that if you get first-time homebuyers purchasing then it would crank up the real estate engine. But with 50% of home sales in metro Atlanta being distressed (foreclosures /short sales), there's no move-up buyer in those homes once they're purchased. So we are seeing an impact from the tax credit, but it's not having as big of an effect overall as everyone had hoped.

I ran some market stats yesterday and was amazed at how many homes are under contract right now set to close in November. This clearly points to the tax credit motivating some buyers at the last minute. The flip side to that is that it really has reduced the quality inventory so lots of buyers are getting locked out right now as they're not happy with current selection.

So I guess the key takeaway and something you really need to impress upon your buyers, is if the tax credit is extended, reinforce that you do not want to wait until the last minute as you'll be stuck picking through what everyone else did not want to purchase.

The First time homebuyer credit has made a significant difference in the Ct shoreline market. A majority of clients we are working with are first time homeowners that were eligible for the credit. However, I'm really not sure this credit is ultimately a good thing overall. I feel all of the maipulations currently being done by the government are merely prolonging the inevitable pain that will follow. As for the real estate market, it is currently doing better, however, in my opinion it is being artificially inflated. Once the home buyer credit is gone and interest rates start going up (which is not a matter of if they go up but simply when they start going up), prices will again begin to decline and the market will be in for another round of chaos.

The tax credit has motivated a few FTB's in my market to buy rather than continue to rent. The IRS is reporting that there are billions of dollars in tax fraud going on with this tax credit making it less likely for an extension.

http://www.msnbc.msn.com/id/21134540/vp/33440171#33440171

I sold 3 houses representing buyers that were eligible for the tax credit. I think all 3 would have bought anyway and just thought of the $8,000- as a bonus, found money.

Unless buyers can used the credit for a down payment & closing costs I don't see how it brings anyone new into the market. By that I man a lender should be able to give a bridge type loan secured by the tax credit and not have the buyer go through some non profit housing program as they were trying to do here in Florida.

Dirt cheap prices and historically low interest rates are what is moving houses here.

First, the $15,000 tax credit will never fly, nor do we want it to. I don't think the $8,000 will be extended, but I could be wrong.

Talked to many first time buyers and seeing definite movement in our market.

But some of the first time homebuyer questions are really amazing - as of 3 weeks ago, we were still being asked "If I write a contract now, can I have my new home completed by the deadline?" It does take more than 60 days for a homebuyer to line up financing, choose a lot and floorplan, and BUILD A HOME! I know there are some exceptions (manufactured housing), but that's a whole different topic.

Working with first time homebuyers is a huge educational process......

I agree with what Aaron said about not waiting until the last minute if it is extended. I have a few first-time buyers with whom I spent a lot of time looking for a good fit, but the inventory was not what they wanted. I have seen some homes that have been on the market for months go under contract this past few weeks, and I suspect the incentive was the motivation.

Not for me! Most my buyers did not quilify for it They were just thrilled to buy at the lowest market.

It has created activity.It is aimed at the people who need it most, the people without equity from a prior home. When that home sells in NJ there are realty transfer fees paid to the state, and an average 4 transactions occur from this one. The transfer taxes more than offset the $8,000 from the government, in effect costing them nothing. There is also all of the spending for the move, and the new home. This keeps, and creates jobs as well as tax revenue. This is a program that supports the 70% of our economy which is consumer spending. Also when these benefits are applied to the lower incomes thy are spent,helping us all due to the multiplier effect of consumption.

I believe that a high percentage of business that agents in my area are conducting right now is with first time homebuyers seeking the tax credit. It is helping greatly to reduce short sale and foreclosed property inventory. Since the inventory that the first time buyer is typically purchasing is bank owned, I'm not convinced that it's creating 'move up buyers'. Mid and upper range inventory is still slow to sell. If the tax credit were extended to include all buyers, I would think that we'd then see activity across all price ranges which would stimulate the entire market vs. just move distressed property.

Yes, I think the first time buyer's credit has certainly had an impact on local sales. Over 75% of my sales this year have been to first time buyers. Most of them will be taking advantage of the credit. Even some that haven't bought yet were motivated to get out because of it.

I also believe that we may already be seeing the result of not extending the credit with over a 13% drop in mortgage applications last week. If they are going to do something, it should be before buyers settle in for the winter.

I don't know if it has made a real difference or not. I don't know that my first time buyers have jumped or not jumped. I'm sure they have appreciated the credit, but I've had a few put home buying on hold even though the credit would have made a big difference, and others are now starting to look, even though it's probably too late.

I think there is doubt as to the refundability and perhaps they are happy about it privately but not talking about it out loud?

There is no question the $8000 impact on the lower end housing in San Francisco East Bay Area. It will be interesting to see how the market behaves in the next few months. I represent mostly buyers, so I don't want this hand out to continue.

Here is southwest Florida, it has made a huge impact. Combine this with the buying power gained from foreclosure sales and our market was up 66% in the third quarter of 2009 (from the same quarter of 2008)!!!

Tim Ryan, #1 Naples FL Buyers Agent, #1 Naples FL Foreclosures http://www.naplesguru.com info@naplesguru.com

I have not seen a benefit here. All of my closings this year have been either move up or down and commercial. As a matter of fact, in the two years that the credits have been available (including the $7500 from 2008), I have only had one buyer take advantage. For me, if the credit is not extended, it would not help or hurt. Currently, I have three transactions in the works and none of them are first-time homebuyers.

Yes, it has made a HUGE difference in Rochester, NY. Because of our affordable housing prices, first-time buyers SWARMED our market. Home sales in our area went up 48.1% from the 2nd to the 3rd quarter. I'm crossing my fingers that the legislation to extend the credit is passed. It was a huge shot in the arm for our area!

I think that it has made some slow buyers make up their mind and get off the fence, but overall, I'm not sure that it caused anyone to buy who hadn't already planned on it.

I think all it has done is to delay people in making a decision.

The FHB credit has made a huge difference for me! I live in an area where there are decent, and even nice homes, under $125,000. I've listed 3 that sold for $80,000, maximizing the effect of the first time credit. I've also worked with several young couples who have been working diligently to take care of, and repair their credit issues in order to be able to purchase. Good, even though they can't meet the deadline. I've seen a few buyers who are waiting to see if there will be an extension, just in case there is an increase. I can say I've had 7 sales where the first time homebuyer credit was a major factor in the decision.

No, it made no difference to me! All my sales this year have been in the second home/investment category. No first time, primary residence at all.

I think it has helped a lot of the seeds I planted in the past for fence riders, come to a great crop this year.

I really hope the Federal Government extends it because these same homeowners who beat the deadline will be creating a buzz with friends and family when they collect those $8000 checks.

Also, unlike Cash for clunkers this money was invested and recycled in the United States with home sales and retail sales soaring to furnish the homes. Cash for Clunkers benefitted foreign countries with the highest sales andprofits going to Toyota and Honda. JMO

Have they actually extended it for the military? I thought it had not passed through Congress yet. I have worked with many first time home buyers this year so I would say it has made somewhat of a difference in my business.

I think it has brought the buyers out, but I do not have homes for first time buyers. The market is tight and investors have snatched up the properties.

I have personally seen very little from the tax credit!! I guess it is helping to drive some home sales figures...but are we setting ourselves up for a dismal '10?? Let's pretend that rates go to 6%, tax credit is banished, and the FHA loan limits decrease this next year?! It could be a long haul....

It has had an impact on our market, especially for homes selling below $200K. I would estimate that 60%-70% of our business has been FTHB's.

It certainly has for me. Three out of four of my last transactions were first time home buyers. Every one of them got off the fence because of that credit.

Loreena - I think the $8000 tax credit has helped push things along, but its not the ultimate decision maker for many home buyers. One of my customers has been looking for 6 months and checked out many many homes. Ultimately, they are holding off for another 6 months because they didn't want to be rushed into a decision. Another family I'm working with is still trying to find a home (vacant) so they can take advantage. In this situation, the tax credit is a big motivator. I'll keep you posted... its already 10/23.

OCT

In my experience it hasn't made much of a difference. Buyers who are taking advantage of the tax credit were going to buy anyway, it was just a bonus. It MAY have prompted some to act sooner.

Loreena, sorry for the delay, but to answer your question, BOTH of them move out of state. One took a new job in another city, the other just wanted to "find himself" and moved to Vegas! go figure. :)

OCT

Hello again Loreena. I agree that the Credit has spurred lots of interest in homes also under $300,000 in my area too. However, I have noticed that the home prices seem to be artificially inflated by about $20,000 because of this Credit (in So. Cal).

I appreciate the new buyers and the activity that they have brought to the RE market. However, $1Billion a month is a lot for the American taxpayers to pay. It is not free money. We will have to pay the bill eventually. Also, it is time for the markets to self correct.

If they approve the Credit again, I will not be upset. I will just get ready for another round of buying :-)

NOV

In St. Augustine, FL it has increased interest and some sales, altho the sales prices are very low. However, I remain forever grateful.

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