Tax credit extended
Homebuyer credit increases urgency to buyBy JILL SCHRAMM, Staff Writer jschramm@minotdailynews.com
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North Dakota Realtors are welcoming the continuation of a federal tax credit for first-time homebuyers and an expansion of that credit to other homeowners. They say sales have been higher in the state thanks to the existing first-time homebuyers' credit approved by Congress as an economic stimulus measure.
Even in Minot where the housing market already is strong, the existing first-time homebuyer's credit is viewed as contributing to brisk sales.
"Without a doubt," said Wade Williamson, president of the Minot Association of Realtors. "Some of the people that were on the fence, if they were going to buy, have bought. It's hard to turn down that money."
Under the original law, qualified first-time homebuyers could receive a $8,000 tax credit on homes purchased before Nov. 30.
Earlier this month, Congress voted to continue the credit to May 1, 2010. Homeowners will have until June 30 to close sales. Lawmakers also raised the qualifying income limit to $125,000 for single taxpayers and $225,000 for joint taxpayers and added a $6,500 tax credit for other primary-home buyers. A stipulation on the $6,500 credit is that homeowners must have lived in their residence for five consecutive years over the previous eight years. Purchase of a new house must occur between Nov. 7 to the end of April 2010, and the value of the home must not exceed $800,000.
Mark Wax, housing program director for the U.S. Department of Agriculture's Rural Development in Bismarck, said the agency's guaranteed loan program has seen a 25 percent jump in activity in North Dakota this past year.
The agency can't determine how many of those home loans were first-time buyers eligible for an $8,000 tax credit. But judging by the number of calls from real estate agents wanting to get the loans processed before Nov. 30, the interest in the credit is there, Wax said.
North Dakota Housing, which purchases mortgages from original lenders, had received 1,686 loan applications from first-time buyers in 2009 as of Nov. 12. That compares with 1,512 applications for the same period in 2008 and 1,616 for the same period in 2007.
However, in Ward County and Minot, the number of first-time buyer loan applications to North Dakota Housing is down. There have been 104 applications from Ward County this year compared to 174 last year. From Minot, there have been 83 applications this year compared to 158 last year.
Dave Flohr, director of the home ownership division at North Dakota Housing, said the decline in the Minot area could indicate a tight market that makes it difficult to find desired or affordable housing. Also, not all first-time homebuyer loans go through the housing agency so not all sales would be reflected.
Lauri Hopwood, mortgage loan officer with Dacotah Bank in Minot, said people looking for their first homes are considering the credit in their decisions to buy. Inventory is an issue, though.
"That's been pretty tricky for people," she said. If they are qualified for a loan in a price range in which there's strong demand for houses, it can take a while to find a home, she said.
Figures from Minot Multiple Listing show 607 home sales through October this year, compared to 606 sales for the same period last year and 620 sales for that period in 2007. There have been 862 houses on the market this year, compared to 774 through October in 2008. The city issued 139 building permits through October for single-family homes, compared to 142 permits through October 2008.
Historically low interest rates and city growth in Minot also are contributing to home sales so it's difficult to say what sales figures might have looked like without the tax credit.
Williamson said the biggest wave of sales spurred by the tax credit likely has passed because most eligible, first-time homebuyers rushed to make the Nov. 30 deadline. However, he foresees the new and extended credits will bring more buyers into the market early next year.
Jill Beck, executive vice president for the North Dakota Association of Realtors, Bismarck, said the association anticipates that the extended and expanded tax credit will increase sales and boost business for movers, furniture stores, home inspectors and others.
"It's very much a good thing," she said. "We think there will be a good impact in North Dakota."
