Homebuyer tax credit comes to a close

There are just a few hours left for potential home buyers to cash in on a federal tax credit.

There are just a few hours left for potential home buyers to cash in on a federal tax credit. [audio: 100429LFHOUSE.mp3]

Kalin McNichol is sitting at her dining room table looking at pictures of her new home on her laptop.

“I think the number one selling feature for me was the garage.  So I had storage and a place for my car…and its’ big open living space so that you can entertain and then two decent sized bedrooms and lots and lots of closets which I’m very excited about. Lots of light, so I’m pretty excited…I’ll show you some more here…fade under…”

McNichol has lived here on Spruce Street for three years in a beautiful open one bedroom place with hardwood floors.  Her lease is up in July.  After looking at 20 houses over two months, she settled on a two bedroom on Bainbridge Street just a few blocks away.

She’s taking the plunge.

“I guess I’m officially a grown up now…”

…thanks to the incentive of the tax credit.

McNichol is one of the first-time home buyers across the country who is entering into a binding contract by the end of the month to get a tax credit of up to $8,000.  Existing homeowners who buy a new place are eligible for a credit of up to $6,500.

McNichol says she’s paying $365,000 for her new place, and already has plans for the money she’s saving,

“It’s that extra money to make home improvements that you want or to an extent I feel like it’s almost like a discount on my house.”

Sitting next to McNichol, her broker Jeff “City” Block chimes in to say if there was no tax credit McNichol may have offered less for the house, not made an offer at all, or just taken longer to decide.

“Right now both me personally and the agents on my team we have more stuff under contract now than we’ve had since the hey day of the market in 2006.  We have as much under contract now as we did when the market was at its absolute high.”

How much of that is because of the tax credit?

“That’s really the big question.  It’s actually my hope that while the tax credit has helped to spur things on, that it’s not just a frenzy based purely on the tax credit and I don’t think that’s gonna be the case…hopefully the market’s gonna continue to move forward over the next weeks, months, and even years. “

Homebuyers looking to cash in on the federal tax credit have until June 30th to close on the home of their dreams….or at least a place with a washer and dryer.

Econsult Corporation Vice President Kevin Gillen [GILL-in] monitors Philadelphia area real estate markets.  He says there’s a big discussion going on about so-called “shadow homebuyers” –

“People who would like to buy a home but have been sitting on the sidelines for the past few years either because they don’t want to buy an asset that’s declining in value or because they can’t qualify for the mortage credit they need to buy a home like they could during the boom years.”

Gillen says the tax credit has pushed people off the fence.

“We know that it has stabilized the market because we’ve seen prices sort of bottom over the last year and activity has picked up a bit but we don’t know how much of that is true market stabilization or home pruchases that would have happened in the future after the market naturally stabilized on its own into the great and it’s at very high cost to the US taxpayer.”

Gillen says no one knows if open houses next month will be empty without a tax credit to lure in buyers.