Real estate professionals believe tax incentives will spur home sales

Sedalia-area real estate professionals believe the federal government’s extension of tax credits for home buyers is a positive step to get more people into the housing market.

On Friday, President Barack Obama signed a $24 billion economic stimulus bill that extends unemployment benefits to the longtime jobless; the measure also provides tax incentives to prospective home buyers.

Brenda Houk, of Reece & Nichols Legacy Real Estate in Sedalia, said, “The consensus among all of the real estate people I have talked to is that anything that would entice people to look (at houses) again would be beneficial.”

The tax credits, added by the Senate, center on extending the popular $8,000 credit for first-time home buyers. That credit, which was to expire at the end of this month, will be available through June as long as the buyer signs a binding contract by the end of April.

The program is expanded to include a $6,500 credit for existing homeowners who buy a new place after living in their current residence for at least five years.

Luke Beaman, with Reece & Nichols Golden Key Real Estate in Warsaw, said, “I don’t think there is any question that it will increase sales and get people into the market.”

Beaman, president of the Sedalia-Warsaw Board of Realtors, said the tax credit extension for first-time home buyers, along with the tax credit for existing homeowners, will help bolster a market that “hasn’t been escalating.”

Prolonging the life of the home buyer credit has been a priority of the real estate industry, which says it has been instrumental in beginning to turn around a market that was a major cause of the economic downturn. About 1.4 million first-time home buyers have qualified for the credit through August, and the National Association of Realtors estimates that 350,000 of them would not have purchased their homes without the credit.

Janet Kresse, recorder of deeds for Pettis County, said her office has seen an increase in real estate transactions the past couple of weeks. There have been fewer foreclosures and fewer people refinancing, but more people coming in to do research on properties.

“Hopefully that will keep up,” Kresse said.

The addition of the incentive for existing homeowners could serve as a solid enticement for residents looking to move into a larger home or downsize to something more manageable.

“That part I am extremely excited about and I wish they had done it earlier this year,” said Tina Roquet, of Preferred Properties in Sedalia.

Roquet said reaction to the initial round of incentives for first-time buyers was less than what the industry had hoped for; she added that she has several homeowners who have properties on the market now who stand to benefit from the program, “but we have to move their current homes first.”

Houk noted that “$6,500 won’t make or break most buyers, but it is an incentive.”

Roquet stressed that the time frame of buyers having a valid contract by the end of April but not having to close until the end of June will give “lenders ample time to get everything done in case one of those glitches comes up.”

Beaman said, “In general, it is terrific for home buyers and home sellers. If people want to move up into a bigger home, this is a great opportunity to do so.”

For Roquet, the incentives provide a positive outlook:

“This should really help our first quarter in 2010, and typically the slow time (for the real estate market) is the winter months.”

The more than $21 billion cost of the tax credits would be paid for largely by delaying a tax break for multinational companies that pay foreign taxes.

 — The Associated Press contributed to this report.