Home-buyers program expires after Thanksgiving

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September 01, 2009

By Greg Stiles

Mail Tribune

Three months might seem like a long time to house-hunters.

But shoppers qualifying for the first-time buyers tax credit might have less time to cash in than they might think.

The $8,000 American Recovery and Reinvestment tax credit expires Nov. 30, the Monday after Thanksgiving.

Realistically, says Terry Rasmussen, a principal broker with RE/MAX Realty Group on Barnett Road, home buyers have 45 days to position themselves to receive the program's benefits.

"Appraisal orders take a week to two weeks, and it typically takes 30 days to get it back," Rasmussen says. "I'm comfortable with an escrow period of 45 days for a typical sale or bank-owned property, but not for a short sale. Many things must happen during those 45 days, including inspections, loan application, appraisal, credit checks, title searches and behind-the-scene items."

The tax credit is a dollar-for-dollar reduction on federal taxes, not a deduction. Buyers will receive the difference when they receive their refund checks.

Buyers should determine if they qualify sooner, rather than later.

One couple with whom Rasmussen is working sold their previous home on Oct. 3, 2006. By purchasing a home between the third anniversary and Nov. 30, they qualify.

"That's really the exception," Rasmussen says. "The majority of people have just responded to the market conditions. When you take the prices, the interest rate and affordability, the whole package is the best I've seen in 20 years selling real estate."

In the past year, the housing-affordability index for Jackson County has climbed from about 80 to 120, meaning buyers can afford roughly a third more than they could this time last year.

The first-time buyer program has spurred between 30 percent to 40 percent of the single-family residence sales since it was introduced, says Steve Blanton, who oversees Rogue Valley Association of Realtors and Southern Oregon Multiple Listing Service.

"It's had a substantial impact here, without question," Blanton says. "It's difficult to separate out factors such as falling prices, the interest rates and the first-time buyers tax credit. But the tax credit has become the tipping point for bringing first-time buyers into the market."

The winter months generally are the quietest time of the year in the local real estate market, so it might be hard to distinguish the normal down cycle of activity from the end of the program.

"Hopefully, people will understand it's a good time to buy a home anyway because of the prices and interest rates," Blanton says. "With all the government's deficit spending, who knows how long before inflation heats up. When that happens, the (Federal Reserve board) often raises interest rates."

Reach reporter Greg Stiles at 776-4463 or e-mail business@mailtribune.com.

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