How much impact has the extension of the home buyer tax credit had on Pensacola Real Estate sales?
The answer is elusive. There are many factors involved that make it hard to determine what impact the tax credit has had on local real estate sales. One report released on March 1st, 2010 indicated that the extension of the tax credit has had very little impact on real estate sales on a national level.
Congress extended the first time homebuyer tax credit of $8000 through June 2010. In addition, they added a tax credit of $6500 for existing homeowners who decide to purchase another home (it must be their primary residence).
The report I read through the Florida Association of Realtors indicated that so far, people are staying put. The results of the report are based on nationwide real estate sales and interviews with real estate agents around the country.
Why isn’t the homebuyer tax credit working as expected?
High Unemployment Rate
The unemployment rate is still near 10 percent and consumer confidence is falling. During periods of high unemployment and low consumer confidence, buyers tend to wait it out, not run out and buy a home.
Many Homeowners are Upside Down
While many homeowners would love to sell right now, their mortgage is higher than the value of their home. They are stuck where they are.
Harsh Winter Weather
Since we have had an unusually cold winter, many would-be buyers are not out house shopping. Even Pensacola has been unseasonably cold this winter.
Tax Credit Just Not Big Enough
It appears the tax credit is just not enough to entice buyers out into the real estate market. When people’s confidence is low, they are more likely to play it safe and stay put, even if they have the ability to move. And the amount of the tax credits is not even enough to cover moving and closing costs if selling an existing home to purchase a new one is even an option.
I checked the Pensacola Real Estate Market sales for February 2010 (full report coming soon) and was pleasantly surprised to find that Pensacola Real Estate sales are on par to match or exceed last year’s February home sales. February already has 259 home sales, which is 50 more than January of this year (see January Pensacola Real Estate Market Report).
As of this writing, February is over and we’re into March. However, there are still real estate agents who have not entered their sold listings from February into the Pensacola MLS. To get the most accurate real estate market data, I usually have to wait a week to 10 days after the end of the month to check the local market statistics. (Personal pet peeve, which I won’t get on a soapbox about at this time).
Tax Credit Qualification
To qualify for the $6,500 credit, buyers must have owned and lived in the same home for five consecutive years out of the past eight. They must sign a contract by April 30 and close before June 30. The home’s purchase price can’t exceed $800,000, and it must be used as a main residence. The income limit for single taxpayers is $125,000; for a married couple, it’s $225,000.
The same rules above apply to first-time homebuyers, except that the tax credit is $8000 and the buyer must not have owned a home for the previous 3 years.