Realtors hope homebuying stays up; experts skeptical

Melissa Westphal

The last few months have kept Tam Derry busier than most of 2009. Derry, a Realtor with Dickerson & Nieman, hopes the momentum of the extended first-time homebuyers credit continues even after the credit expires Friday.

Some housing experts say they think it was a worthwhile effort — housing sales increased year-over-year for March — but expect that lower interest rates, not federal tax credits, will tempt more people moving forward.

“People are not going to change their behavior, overall, unless the credit is viewed as permanent,” said Jeremy Groves, an assistant professor of economics at Northern Illinois University. “Since this one has a clear end date, there will be a rush to make it in before that date, and then things will slow back down.”

Federal officials extended the $8,000 first-time homebuyer tax credit back in November and added a $6,500 tax credit to prospective buyers who have lived in their homes for five years or more.

Eligible taxpayers have to buy or enter into a binding contract to buy a home by 11:59 p.m. Friday and close by June 30. For qualifying purchases, taxpayers could have claimed the credit on their 2009 return or can hold out for their 2010 return, according to the Internal Revenue Service.

Natalie Hegge moved to the area from Nebraska last fall and bought a home a few months ago in Byron, taking advantage of the tax credit.

“I had a goal to be able to use it before it was extended, but I didn’t want to buy a house just to get the tax credit,” Hegge said. “I was willing to let it go. But when they extended it, I said, ‘OK, I’m going to do this.’”

Like Derry, Steve Bois, CEO of the Rockford Area Realtors, is staying positive about the housing market in the typically busier spring and summer months.

“I think we’ll continue to see momentum heading into the spring market,” Bois said. “What we’ve found is that the price on a home has to be compelling. If there’s a compelling price, it will sell. Buyers are becoming smarter than they’ve ever been.”

NIU’s Groves said there’s no solid way to tell whether the credit was truly effective until the final numbers are crunched.

“The point of the credit was to act as a crutch for the housing market until the economy can rebound,” Groves said. “The key question is whether the economy has sufficiently rebounded to stop the flood of foreclosures and begin selling down the built-up inventory of homes for sale on the market. ... Unfortunately, only time will tell.”

Reach Rockford (Ill.) Register Star staff writer Melissa Westphal at or 815-987-1341.