$8,000 credit for first-time home buyers driving local market

BY MATT OLBERDING/Lincoln Journal Star
Sunday, May 10, 2009 - 12:11:13 am CDT
You wouldn’t know it by looking at the latest statistics, but things seem to be looking up in the local real estate market.

Realtors say there’s lots of activity in the market, especially among first-time homebuyers. That interest is encouraged somewhat by historically low interest rates and home prices that in many cases are lower than they were a couple of years ago.

But the big driver seems to be the $8,000 federal tax credit for new buyers or people who haven’t owned a home for a couple of years.

“The $8,000 tax credit has been the stimulus it was intended to be, really,” said Andrea Schneider, a Realtor with Woods Bros Realty.

Schneider said she has been concentrating her efforts on the first-time homebuyer market, because, “that’s really the market that’s hot right now.”

Larry Zitek, owner of Coldwell Banker BancWise Realty, said he, too, has seen a pickup in first-time homebuyers.

Zitek, who is also vice president of Geneva State Bank, said he’s seen parents and other relatives “stepping up” to help with down payments so people can buy a house and take advantage of the federal tax credit.

For Fredrick Brewer, it was the economy, rather than the tax credit, that led him and his wife, Shari, to become homebuyers.

“We just knew with the economy that we might be able to get a fairly decent deal,” said the 23-year-old Brewer.

The Brewers bought a two-bedroom, two-bath house in southwest Lincoln in February for $102,000 — $5,000 less than the assessed value and only $6,000 more than the home sold for in 2004.

Brewer said the $8,000 tax credit hadn’t even been approved yet when he and his wife started looking for a home, so that was a bonus.

Another bonus: with interest rates so low, the Brewers are paying less in monthly mortgage payments than they did for rent for a town home.

Renewed interest among first-time buyers like the Brewers failed to move the local real estate market out of its funk in the first quarter, though.

Through March 31, there were 616 closed home sales through the local Multiple Listing System, which covers all of Lancaster County and parts of surrounding counties. That’s down more than 8 percent drop from the first quarter of 2008.

Still, there were some encouraging signs, said Doug Rotthaus, executive vice president of the Realtors Association of Lincoln.

“Definitely, January and February pulled the quarter down,” Rotthaus said. But he called March numbers “encouraging.”

Pending sales —sales with a signed purchase agreement but not yet finalized — were up more than 10 percent in March compared with March 2008.

“That’s encouraging,” said Rotthaus.

What’s not encouraging, though, is the market for sales of new homes, which continues to plunge to levels not seen in more than a decade.

There were only 64 new homes sold in the first three months of the year, down more than 35 percent from the same period last year, according to data from the Realtors Association.

“We’re still seeing (new home sales) lag behind,” Rotthaus said.

Schneider, who with her husband, Scott, owns Schneider Custom Homes, said she doesn’t expect any improvement in sales of new homes this year.

“Certainly our sales are going to be down this year, and they were down last year as well,” she said.

But even in the new home market, there was one bright spot: There were 21 sales of new homes priced at $159,000 or less, the same number as last year.

Duane Hartman, who owns Hartland Homes, which builds mostly affordable homes for first-time buyers, said his business is up through the first four months of the year compared with 2008.

“It’s not healthy, it’s not fantastic,” Hartman said. “But it’s better than it was, and that’s great news.”

Hartman said the fall and winter of 2008 were “about as bad as it’s ever been” for the new home market in Lincoln.

While the signs are encouraging that things are picking up, Hartman said he’s not yet ready to declare a recovery.

“I’m kind of holding my breath,” he said. Let’s just say I’m ‘cautiously optimistic.’”

Reach Matt Olberding at 473-2647 or molberding@journalstar.com