Regional
(2009-11-05)
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DENVER, CO
(KUNC) -
More than 6,000 Coloradans have taken advantage of the first time home buyers tax credit and local realtors are joining the chorus asking Congress to extend the first time homebuyers tax credit. It's set to expire at the end of the month. Congress could do that as early as today.
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Think of the government's Cash for Clunkers program when you consider the $8,000 credit. Cash for Clunkers led to a short term spike in car sales, just like the home tax credit has caused a small boom in one corner of the housing sector.
That's the rub for real estate economists like Tom Thibodeau at the University of Colorado.
"I don't think it's going to be encouraging people who would otherwise not want to be homeowners, to become homeowners," Thibodeau says.
And Thibodeau worries the credit won't help the long term recovery of the housing market.
But, he says, "it's going to encourage people to buy sooner than they might otherwise feel comfortable buying, and to that extent it's going to help stabilize prices."
The credit encouraged first time homebuyers Tiffany Aries and her fiance to get into the game in Denver. Without it, the couple would have waited another year or so for the economy to rebound.
"With the way that interest rates are right now, and the tax credit, that's really what pushed us out into the market," Aries says.
Except that now, she's running up against a tight deadline: November 30. That's when the tax credit is set to expire. And her seller just accepted her offer.
"(It) just keeps getting narrower and narrower," Aries says.
And then there are the new regulations on lending that will slow what used to be a typical thirty to forty five day window from contract to closing.
"We've got people that are ready to buy, but now they're punching into that time limit, and just like anything else the promotional campaign took some time to act, now people are very well aware of it," says realtor Mark Trenka, who also wonders how many more buyers might enter the market if the credit gets extended through April.
Trenka sells condos and lofts in downtown Denver, where he's also the president of the local board of realtors. Like many in his profession, Trenka's also pushing for the program's expansion. Congress this week indicated it may let people who've owned homes for more than five years become eligible for a $6,500 tax credit.
Trenka uses his own family as an example. They own a home in the $300,000 range.
"If there's a $6,500 credit, we might consider the next stepped house, and move on, and then bring another house at the lower end of the inventory back in," he says, "and move onto that other house and buy new curtains and drapes and all the stuff that people do when they purchase a new home."
Trenka says to bring stability back, the market needs to expand not only at the low end, but the middle and higher end as well.
But CU's Tom Thibodeau doubts a small tax credit would make much of a difference for people in the upper end of the markets.
"It's really not helping people in Boulder run out and buy a $600,000 house," he says.
But high end markets like Boulder aren't facing the brunt of the problem right now. And Thibodeau says the first time homebuyer tax credit might go a long way to help neighborhoods hit the hardest by the sub prime loan crisis.
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