11.13.2009 | Homebuyer tax credit extension to help market recover (Source: Orlando Business Journal)

Local residential Realtors are cheering after the federal government extended and expanded the $8,000 first-time homebuyer tax credit on Nov. 6 through mid-2010.

Other changes, which will make even more people eligible, include:

• A $6,500 tax credit for existing homeowners, who must have used the home as a principal residence for five consecutive years out of the previous eight.

• Effective Dec. 1, income limits eligible for the credit have risen from $75,000 for a single person to $125,000, and from $150,000 for a married couple to $225,000.

• An extension of the credit deadline until April 30 for a signed contract and a closing date no later than July 1.

• A cap on the cost of a home, which previously had no limit, to $800,000 maximum.

To date, the tax credit — part of the $787 billion federal stimulus package — has contributed $22 billion to the general economy, with 2 million buyers taking advantage of it this year, said the National Association of Realtors. Projections for 2010 sales due to the extension were not available.

“The last incentive was great for the industry, and that’s why we pushed to extend it,” said Les Simmonds, president and CEO of Longwood-based L.G. Simmonds Real Estate Corp., who said the tax credit boosted his business by 10 percent.

That, in turn, helped level the playing field for Realtors trying to sell homes in a Central Florida market saturated with bank-owned, foreclosed houses going for below-market values, he said. The tax credit can be used on foreclosed and short sales, as long as the house will be the buyer’s primary residence. A short sale is a home that sells for less than what’s owed on the mortgage with the lender’s approval.

Home sales in metro Orlando jumped nearly 80 percent, from 1,228 homes sold in October 2008 to 2,206 for the same month this year, the Orlando Regional Realtor Association said.

The number of local homes on the market dropped 5.5 percent from 4,407 listings in January to 4,165 in October, said the association. The average sales price of a home in October was $130,000, or 12.2 percent cheaper than January’s average $148,000 sales price.

In October, 62 percent, or 1,378 of the 2,206 closings in metro Orlando were foreclosed home sales. Prices for bank-owned and short-sale properties ranged from $79,900-$125,000, said the association.

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