Home sales in the state are likely to get boost
Share of price offset by tax credit is bigger in Indiana than elsewhere
By Jeff Swiatek, The Indianapolis Star
Posted: November 10, 2009
A federal tax credit for first-time homebuyers extended by Congress last week and approved by President Barack Obama could increase hoome sales in Indiana.
The tax credit, $8,000 for a first-time homeowner, was set to expire Nov. 30. Obama's signature extends it to April 30 and provides a new $6,500 credit to people who have owned and lived in a home for at least five consecutive years of the past eight years and now want to buy another home.
David Caveness, senior vice president of Carpenter Realtors in Indianapolis, said the credit is essentially worth more in Indianapolis because its homes are priced among the lowest of the 60 largest metro areas in the country.
"So, by theory, it should impact us the greatest -- the credit is a bigger part of the purchase price," he said.
Indiana is among a handful of states with an average listing price of less than $200,000. The $8,000 credit covers a larger chunk than it would in pricier markets.
"That would reimburse a good portion of your down payment," said John Holmgren, spokesman for the California Association of Mortgage Brokers.
For F.C. Tucker Co, the area's largest realty company, Indianapolis-area sales of 805 homes last month were its second-best October in the past 12 years. There's "no question" the tax credit is the reason for the boost, said H. James Litten, president of the residential division.
The expanded credit is expected to help even more.
"It will be a great thing for the housing market, and what's good for housing is good for the overall economy," Litten said.
The credit has been especially helpful for moving homes that cost less than $200,000, said Mark Lopez, an agent for Tucker's Zionsville office.
John Pacilio, a ReMax associate broker in Carmel, said he expected the credit for current homeowners will appeal to buyers of higher-priced homes.
"I'm excited about it. I just got off the phone with someone interested in buying a half-million(-dollar) house, and at the end of the conversation they were excited about the $6,500 they can get," Pacilio said.
Most of the recent home sales handled by Landrigan & Co. Realtors involved transactions eligible for the tax credit.
"Whether you agree with the stimulus or not, it has had an effect," said GB Landrigan, president of Landrigan. "In the last few months, I'd say three-quarters of our homebuyers have said they would have waited a year or two before buying a home" if the credit weren't available.
Few local companies track the number of first-time buyers in the market, but Carpenter's Caveness said estimates show, thanks to the tax credit, they made up a robust 30 percent to 35 percent of the Indianapolis home-buying market this year.
"I couldn't give you exact data, but the credit has kept us alive on price points under $200,000 and helped us move considerably more homes than we would have. My business would have been pretty slow without it," said Jason DeArmon, an associate broker with Carpenter.
For some buyers, the new $6,500 credit could be used to offset losses from selling their existing homes that may have dropped in value in the past two years, said Dan Breault, regional director for ReMax of Indiana.
"The $6,500, maybe that softens it a little. It might help that buyer feel better about it (buying a different home)," he said.