by Mike Sunucks Phoenix Business Journal July 2, 2010
Greg Swann fears that expiration of federal home buyer tax credits will deal another blow to Phoenix’s already staggering housing market.
Swann, a principal with Bloodhound Realty in Phoenix, said ending the $8,000 credit could push down already low prices, and cut into demand impacting the housing food chain of agents, lenders, title companies, appraisers and contractors.
“I could see a huge drop in demand in our vendors’ markets — inspectors, handymen, etc.,” Swann said.
The credits — $8,000 for first-time buyers and $6,500 repeat buyers were extended from Dec. 30 to May 1, but pending sales had until June 30 to close in order to qualify for the breaks.
The credits helped propel home sales nationally and in underwater markets, such as Phoenix. There are efforts in Congress to extend the tax credit closing deadline until Sept. 30. But even if the closing deadline is extended, new sales won’t qualify for the tax break.
Swann said he expects inventory to increase once the tax credit fully expires and has been advising investors to stay on the sidelines.
“I personally do a lot of work with
investors, and I advised them to stand down until the tax credit lapsed, both times. For the homes I’m most interested in for investors, inventories are going up and prices are going down,” Swann said.
Eric Wright, a senior loan officer with CNN Mortgage in Scottsdale, said home buyer tax credits account for about 20 percent of his business and that the extra money encouraged home sales.
“I didn’t see that the tax credit actually created any buyers,” he said. “However, it did give would-be buyers motivation to purchase sooner.”
Wright hopes low interest rates and bargain prices will keep buyers in the Phoenix marketplace.
“I have seen very little drop-off in loan applications. The exceptionally low interest rates have many people still in the market, tax credit or not,” he said.
But national home sales figures aren’t optimistic.
New home sales slumped in May, both in the West and nationwide with the expiration of the tax credits. Sales of new houses in 13 Western states, including Arizona, fell 53 percent in May from the previous month, according to the U.S. Census Bureau and the U.S. Department of Housing and Urban Development.
Nationally, the decline was 33 percent. May’s numbers were the worst since the U.S. government began tracking sales data in 1963.
Swann said he doesn’t expect to see much improvement on Phoenix home prices pulled down by foreclosures, short sales and oversupplies of homes.
“We are overbuilt, and the population is essentially static. Until metropolitan Phoenix starts growing again, nothing else that happens will make much difference. In the meantime, there are excellent opportunities available for all-cash or well-qualified buyers,” Swann said.
Some brokerages are trying to boost demand in the post-tax credit marketplace. Coldwell Banker is offering an $8,000 credit to all home buyers for purchases through July 31.
Wright said other agents and loan officers are trying to stay in touch with clients, new and old.
“Both real estate agents and loan officers are continuing to network and are maintaining relationships with past clients. I have also seen an increase in the use of social networking sites to stay top of mind with potential clients,” Wright said.
Tax credit’s end slicing housing demand - Phoenix Business Journal
