Bye-bye Buyer Incentives?

Jeff Young knew he was going to buy a home this year, but it wasn’t until February that he kicked his search into high gear.

He estimates that he looked at 20 houses before the first week of April, when he bought an English cottage-style three-bedroom home in Chesterfield Village for $180,000.

His primary motivator: the April 30 deadline for the extended home buyer tax credit of $8,000 for first-time home buyers or $6,500 for people who have owned and lived in their current homes for five consecutive years.

“It was a large incentive to buy. I just wanted to take advantage of that,” said Young, the regional director of marketing and quality assurance for Preferred Hospice in Ozark.

“It was maybe only a week or less between the time I’d looked at the house and made an offer,” said Young, who plans to file for the $6,500 tax credit for current homeowners available through the Worker, Homeownership and Business Assistance Act of 2009. Home purchases eligible for the tax credit must close in June.

As of Feb. 20 – the latest data available – Missourians had claimed 38,466 tax credits totaling $268.1 million on their Missouri tax returns since the government began offering tax credits in April 2008, according to Internal Revenue Service spokesman Michael Devine.

Devine said it’s too soon to tell how many individuals used the tax credits before the deadline, since taxpayers have until April 15, 2011, to claim them on their taxes.

But local Realtors believe the credits – and the deadline – kept them busy, particularly from mid-March through April.

“April was by far the busiest, especially the last week,” said Realtor Tom Rieken of Murney Associates Realtors. “I think I sold my last home at 10 o’clock the Friday night before the deadline.”

Data from the Greater Springfield Board of Realtors illustrates the uptick. In April 2008, when the tax credit became available, there were 557 home sales recorded. That number dropped to 471 in April 2009, but jumped to 642 in April of this year when the credits ended.

Jeff Gerken, broker/partner at Gerken & Associates Inc., concentrates on home sales in the Tri-Lakes area, which makes for a different type of client base, he said, estimating about 50 percent of his home sales are for vacation or second homes.

In April, however, that changed: about 75 percent of his sales were clients hoping to take advantage of the tax credit for permanent residences.

“Those are mostly locals who were renting or moving back to the area from college, buying their first homes, who maybe weren’t thinking of buying before,” he said. “We’ve also had some military people getting out of the service and buying.”

Guaranteed housing loans
As the real estate market bids farewell to the tax credit, potential home buyers also are without access to the U.S. Department of Agriculture’s Rural Development guaranteed housing loan program. The $12 billion appropriated during the 2010 fiscal year, which ends Sept. 30, already has been exhausted, said George Thomas, public information officer for the Missouri Rural Development office.

The 100 percent guaranteed loan is one of the more popular programs offered by Rural Development, Thomas said, noting that of the $575 million spent in Missouri on its housing programs during 2009, about $540 million was for the guarantee program.

It’s possible that the Rural Development program will be available again, as Thomas said Congress is looking into allocating additional program funds this year. When a similar situation occurred last year, he said, stimulus package funds were used to supplement the program.

Enticements and optimism
Thomas said there are other housing loan programs still available, including USDA Rural Development’s Section 502 Direct Loans, which can be 100 percent loans with no required down payments. Unlike the Rural Development guaranteed loans, no lenders except USDA are involved in the 502 Direct Loan transactions, he said. There also are restrictions: Homes must be in rural areas, and borrowers must meet low-income criteria, which varies by county and is based on 50 percent to 80 percent of area median income.

For homes in rural Christian and Greene counties, the maximum income is $29,750 for one person and $34,000 for a two-person household.

“Back when there was a lot of building going on, developers helped promote the program, whether it be in Nixa, Republic and Ozark,” Thomas said.

There’s also the Missouri Housing Development Commission’s Home Ownership Purchase Enhancement – or HOPE – program, which offers up to $1,250 to families who purchase a new home in 2010, said Jeff Parker, president of the Greater Springfield Board of Realtors and managing broker at Murney. HOPE recipients must meet certain household income requirements for the area, which is primarily a maximum of $58,300 for a one or two-person household, but can be higher in certain targeted areas, which include parts of Greene County.

There also are owner-financed purchases available from builders for buyers who don’t qualify for financing through traditional loans, said Realtor Rieken, who lists and sells homes for Morelock-Ross Builders Inc.

Low interest rates and home prices are also benefits to buyers right now, Rieken said.

He noted that that 20 years ago, when Morelock-Ross first began its owner-financing program, interest rates were 11.5 percent and its starter homes were selling for $53,900. Now, Rieken said, interest rates are around 5 percent and homes start at $107,900 – and mortgage payments are only $80 a month higher than they were when Morelock-Ross first offered owner financing.

“Everyone wants to buy as cheap as they can buy it ­– we’re all human,” he said. “We don’t just want it on sale, but super-duper sale, before we buy anything today.”

As Young settles into his new home and looks forward to claiming his tax credit, he said he’s not making any big plans to spend the money it could bring.

“I’m probably just going to put it right back in the bank,” he said.[[In-content Ad]]