Those who missed credit could save

By Jim Weiker

Columbus Dispatch

COLUMBUS

Home shoppers who missed the April 30 deadline for a housing tax credit might have the last laugh.

For a variety of reasons, they could end up saving more than the $8,000 they could have received from the tax credit:

In some neighborhoods and price ranges, sellers are dropping their prices because buyers are harder to find now that the credit has expired.

Builders and real-estate companies began offering promotions after the tax credit ended that, in many cases, are worth more than the credit.

Interest rates have dropped enough since the credit deadline that, over the life of a loan, a homeowner could easily save more than the value of the credit.

“I think some folks possibly could have benefited from waiting until after the tax credit,” said Joe Jackson, a real-estate agent with Keller Williams Capital Partners. “It would depend on the price point they were buying in and the market they were looking in.”

Home sales leapt in March and April during the waning weeks of the credit, especially for homes priced at less than $200,000, which appealed to first-time home buyers. Since the credit expired, home contracts and building permits have tapered off, leaving sellers with fewer buyers and, in some cases, little choice but to cut their price.

According to the real-estate website Trulia.com, which tracks price reductions, 30 percent of central Ohio homes for sale on May 1 had reduced their asking price — more than in April or March.

Buyers hope they can take advantage.

Karen Kosnikowski learned days after the tax credit ended that she would have to leave her Victorian Village apartment Wednesday because her landlord wanted the place.

Her initial frustration at missing the tax credit changed when she started seeing price declines.

“I would say five or 10 times a day, something comes in, and half of those are price drops. ... Sometimes, they are [down] several thousand,” Kosnikowski said. “So places I’ve seen before are starting to drop, or others are coming into my price range.”

After the credit expired, Dominion Homes and Fischer Homes launched promotions for free finished basements and/or other upgrades. Either deal would be worth well above the $8,000 credit.

Real-estate companies also are getting into the act. To compensate for the vanishing tax credit, Coldwell Banker launched its Buyer Bonus Program that awards up to $8,000 back to buyers from participating sellers.

Finally, interest rates have dropped nearly half a point since the end of April, saving buyers thousands of dollars over the life of a loan.

Buyers of a $180,000 home who borrowed $173,700 in mid-April at an interest rate of 5.125 percent would have paid $377,442 over the next 30 years —$15,000 more than they would pay if they borrowed last week at an interest rate of 4.75 percent.

“At the end of the day, we don’t believe the tax stimulus will put us any further ahead than we would have been otherwise,” said Jerry White, executive vice president with Coldwell Banker King Thompson.