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Tax credit helps stabilize Manteca home prices

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POSTED May 22, 2009 2:24 a.m.
The clock is running out on $8,000 in free money.

A growing number of real estate agents are reporting that as more buyers enter the marketplace lured by low prices and the $8,000 first-time homebuyers’ tax credit that goes to anyone who hasn’t owned home the in past three years, more of their clients are getting antsy.

They have 192 days left to get a home into escrow by Dec. 1 to qualify for the federal tax credit. Also buyers are showing a resistance to taking homes that teeter on the edge of not appearing structurally sound. A bargain is a bargain only if it doesn’t end up nickel and diming you to death.

The result has been a clear split in home prices with homes that have been classified right or wrong as “junk” stagnating that end up getting less than expected and those that – except for cosmetic issues inside and out – appear relatively ready to move into.

The $110,000 to $190,000 range often sees homes literally go from available to an accepted offer in a matter of a week. That doesn’t seem that impressive but given you’re dealing with bank’s assets management department it is taking place at lightning speed.

Prices aren’t rising in that range nor or they really dropping. They’ve held fairly study especially after the $8,000 tax credit came into play.

Generally, buyers are coming to the conclusion:

•they may not get the house they want at rock bottom prices although their out-of-pocket costs each month will still probably end up being less than what they are now paying in rent even before tax advantages are taken into account.

•time is critical due to loan locks and competition but they’re not willing to just take a home that’s sold “as is” which has resulted in buyers backing out of deals.

Both trends are sending mixed messages to banks which is a good and a bad thing. They’re still spending a lot of time sorting things out while there isn’t a temptation to try and raise prices.

The bottom line is the $8,000 tax credit is helping stabilize prices in the lower and middle price ranges – at least in Manteca – by getting more qualified buyers in the hunt.

There is also a growing census that “the recovery” – which may already be underway in the Manteca resale housing sector – means that prices will be relatively flat not just in the coming months but perhaps as long as three to five years.
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