Local real estate agents are seeing a surge in home sales to first-time buyers as many rush to take advantage of a federal tax credit program before it ends next month.
If you are still looking to buy your first home and hoping to benefit from the tax credit, time is running out — unless you act quickly or Congress follows through with a controversial proposal to extend the program.
"There is good momentum right now because of it," said real estate broker Rick Coco, owner of Re/Max Partners in Andover. "I don't see them (Congress) jeopardizing it."
Coco, who has clients throughout the Merrimack Valley and Southern New Hampshire, said people interested in buying their first home and still qualifying for the tax credit of up to $8,000 have at least a few weeks to close in time. He said he has three first-time buyers ready to close on homes in the first week of November just so they can take advantage of the credit.
But other local brokers aren't as optimistic.
"That's getting a little dicey," said Barbara Brown of The Masiello Group, when asked if there is enough time remaining.
Brown, a broker in Atkinson for 33 years, said with the program due to end Nov. 30, those just beginning the process of applying for the credit and closing on a home are taking a risk.
"Hopefully, some of these people in the pipeline will close in time to get the tax credit," she said.
Even with five weeks to go before the program expires, lenders are already telling customers it's too late to benefit, she said.
Brad Dinsmore, owner of Prudential Dinsmore Associates in Windham, agreed potential first-time buyers must move quickly.
"It can be done, but you are getting to the end of the line," he said, noting that it usually takes six to eight weeks to close on a home.
The tax credit program, implemented in February as part of the federal economic stimulus package, has been a major boon to the local real estate market, brokers said.
The program allows first-time buyers to reduce their federal income taxes by 10 percent on the price of a home, up to $8,000.
"It was a huge success in the sense it really drew out a lot of first-time home buyers to act now," said Matt McLennan, a broker and owner of Century 21 McLennan & Company, with offices in Methuen, Bradford, Lawrence, Plaistow and Salem, N.H.
Across the country, about 1.4 million first-time buyers qualified for the tax credit through August. The National Association of Realtors estimates 350,000 of them would not have bought their homes without the credit.
Broker says sales boost due to credit
Coco said his business has seen roughly a 35 percent increase in sales since last year, much of it due to the tax credit.
In the Granite State alone, the tax credit program has made a tremendous difference, Dinsmore said.
"It's been going excellent," he said. "It's been the big driver in the whole market in Southern New Hampshire."
Despite tough economic times, many people have jumped at the chance to buy homes, especially first-time buyers eligible for the tax credit, he said.
For Brown, first-time home buyers represent about one-third of her pending sales, she said.
The inventory of homes priced under $275,000 has dwindled to only two in the Windham area as they have been quickly scooped off the market, Dinsmore said.
"That price range is wiped out," he said.
A home on Blossom Road in Windham listed by another real estate agent for about $250,000 received 20 offers, Dinsmore said. But while such homes are selling fast, even in a down market, local real estate agents said higher-priced homes aren't selling.
"A lot of these homes really sold quickly," McLennan said of the houses priced at less than $275,000.
"One would hope these sales would start the domino effect," he said, but that just hasn't happened.
Dinsmore said while there are only two homes under $275,000 for sale in the Windham area, there are 116 on the market listed for more than that price. In Andover, there are only eight homes available for less than $300,000, but 26 for sale at between $300,000 and $500,000, Coco said.
Even so, the overall real estate market has steadily improved in recent months, the brokers said.
"There is definitely a better feeling of confidence," McLennan said. "(Lower) interest rates have helped."
Keeping the momentum going
The real estate agents interviewed said one way to keep the housing market moving forward is by continuing the tax credit program, especially since it has substantially boosted their sales.
"I'm optimistic at this point," McLennan said. "I do see it happening."
Brown said while she thinks the program will end in November as scheduled, it will probably re-emerge in a different form.
"I would like to see it come back," she said.
But it won't be coming back if the Obama administration has anything to say about it.
The administration said Tuesday that it was concerned about the cost of extending the program amid worries about 107,000 questionable claims being investigated by the Internal Revenue Service and 167 criminal schemes involving the tax credit. U.S. Housing and Urban Development Secretary Shaun Donovan said at a congressional hearing that better cost estimates are needed for extending the program.
Current congressional estimates say it would cost about $1 billion a month to continue the tax credit program. A bill sponsored by U.S. Sen. Johnny Isakson, R-Ga., and U.S. Sen. Chris Dodd, D-Conn., would extend the program through June 30 at a cost of about $16.7 billion.
"I think there will be a lot of pressure to extend it," Dinsmore said.
"The housing market would not have moved without this tax credit," said Lucien Salvant, spokesman for the National Association of Realtors. "It's a fragile recovery, which is why we think it should be extended."
The Associated Press contributed to this report.
