Tax credit deadline good for real estate industry

What real estate crisis?

While other segments of the economy have progressed in starts and fits, the looming federal housing tax credits have many metro Atlanta real estate agents working double time to find homes for their clients.

While spring signals the beginning of residential real estate’s busy season, many agents say business is nearly twice as brisk as last year.

“We’re 42 percent above where we were this time last year,” said Zac Pasmanick, associate broker for The Zac Team of REMAX Greater Atlanta. “The buyers know they have to get under contract by the end of the month and many of them have been looking for months.”

The federal housing credit, first announced in February 2009, offered an $8,000 credit for first-time home buyers. The original program was scheduled to end Dec. 1, 2009, but was extended in November. The program was also expanded to offer qualified current homeowners a $6,500 credit, which can be claimed on 2009 or 2010 federal taxes. Rules of the initiative stipulate home buyers have to be under contract by April 30 and must complete the sale by the end of June.

“This is ideal for first-time buyers because they don’t have to sell something to be in a position to buy,” Pasmanick said. “Those who have to sell to buy that ‘move-up home' have a more challenging task.”

Terrence Jernigan, a technology salesman, thought the same thing when he decided to buy his first home.

“I didn’t have a home to sell and it seemed like the perfect time for me to buy,” he said.

Jernigan, who has a home under contract in Mableton, said he was well aware of the housing credit deadlines during his search.

“I wanted to make sure I wasn’t doing everything at the last minute,” he said. “So I should be closing well before the June 30 deadline, which was the plan.”

Ebony Scott, a first-time home buyer, finds herself in the exact position Jernigan worked to avoid.

“This tax credit is phenomenal and it may never come again,” she said. “But because I just decided to look for a home, I am definitely under pressure to be under contract by the end of the month.”

Scott, who is looking in south Fulton, said if she's unable to find a home she likes and sign a contract by April 30, she won't stop her search, but she will give herself more time.

“I'll look at having something by Christmas if I don't find anything now,” she said.

Keith Sharp, with Keller Williams Realty Premier Atlanta, said he’s seen increased interest in some of his properties.

“People who qualify for the tax credits are gaining a sense of urgency to find the home they love and get it under contract,” he said. “Most buyers understand that these tax credits will not be extended again and are scrambling to find the home that fits their needs.”

As buyers make their selections, closing attorneys are also suddenly busier. The rise in contracts means more appointments for firms like of Harris Wagner Law Group in Atlanta.

“The first week in March, we saw a noticeable uptick in scheduling,” said Jeff Harris, a principal of the firm.

He said many of the closings have involved first-time home buyers and properties ranging between $100,000 and $300,000. Harris said he hopes the trend will continue through the summer months, but some real estate agents are doubtful.

Collis Clovie, managing broker and owner of Century 21 Intown, said he’s seeing five times the number of buyers than he did this time last year, but he’s not sure who will be left to buy once the tax credit expires.

“The normal buyer who would have bought in June would have already been serviced to take advantage of the credit,” he said. “So I see fewer buyers toward the end of the traditional buying season, which will not bode well for our industry.”

How we got the story

The AJC and Cox media partner News/Talk 750 WSB Radio collaborated on this story. WSB Radio’s Pete Combs recently spoke with mortgage brokers and homeowners about homebuyer tax credits and reported on some signs of optimism in the real estate market. AJC business reporter Michelle E. Shaw, who covers residential real estate, followed up by looking at even more data. She interviewed real estate agents, closing attorneys and homebuyers. She found the approaching federal housing tax credit deadline has been good for the real estate industry, but could cause a drop in sales once it expires.

The AJC, WSB-TV and WSB Radio have also joined forces this year to uncover government waste. Follow that coverage at ajc.com/news/government-waste. Got a tip? Send it to newstips@ajc.com.