Friday marks the deadline to qualify for the first-time home-buyer tax credit. That’s the stimulus program Congress expanded and extended in November to help stabilize the housing market.
For Bryan Ashley, the credit was reason to rejoice.
Ashley, a church organist, is practicing late at night at Boston’s First Church of Christ, Scientist. He spent business hours lining up a home loan.
"Between house hunting and practicing, that’s pretty much been my life for the last few months," Ashley said.
Two nights prior, Ashley and his wife signed a purchase and sale agreement for a cozy duplex on a little hill in Jamaica Plain — just in time to get the $8,000 credit.
"I didn’t do the Cash for Clunkers, so may as well go for the house," Ashley said, laughing.
Ashley says they were planning on buying anyway, so they figured, why not buy now and get the cash? They apparently weren’t the only ones.
"The market seemed really hot," Ashley said. "You hear about the slow housing market but this year every time we saw a place that we kind of thought, 'Hmm, that might be kinda nice.’ Bam! It was gone."
They were outbid on a few houses, but managed to strike a deal and push the sale through in time.
To P&S, Or Not To P&S?
For John Maxfield, a Boston realtor with Prudential Unlimited, the April 30 deadline has made things pretty hectic.
"I’ve been working 16-hour days," he said.
But Maxfield says it’s been more hectic than it needs to be, because there's too much confusion.
Massachusetts is different than most states because the home buying process includes first a signed offer, then a purchase and sale agreement, or P&S. Most states have only one contract. Realtors here disagree over what the tax credit requires: the offer, or the P&S. Maxfield says it’s the offer.
"You have a contract on the property. Period. That is a fact," he said. "Everyone’s rushing to put together purchase and sales contracts when in fact, you need only have an offer signed."
Maxfield is confident because he used to be an accountant before becoming a licensed real estate agent 20 years ago. But he seems to be in the minority. Most realtors are agree with Jill Streck, a real estate agent with Chobee Hoy Associates in Brookline.
"What we’re suggesting is better safe than sorry and make sure the P&S is signed by the deadline, which is April 30," Streck warned.
One thing both agents do agree on is that the tax credit isn’t driving many sales that wouldn’t have happened otherwise, at least not in their areas. John Maxfield says most of Boston’s housing market was already recovering.
"So we’ve had this pent up demand, low interest rates, the sellers became more realistic, prices dropped." he said. "So we were doing fairly well and didn’t really need the incentive. But the incentive certainly helped our market out."
How much it’s helping the economy is another question.
Stabilizing The Market, But For How Long?
"The thing about the credit is, you don’t get a lot of bang for the buck," said Chip Case, an economist at Wellesley College.
He says the tax credit has been very inefficient, especially ever since it was extended last year to existing homeowners, too. Case says it mostly just sped up sales.
He’s not sure the housing market will truly recover until more people get jobs.
"I don’t think the tax credit’s going to do a lot one way or the other. We’re either going to have a good spring market, or we’re going to have problems," Case said. "The next two months are going to tell a tale. I think we’re either going to be flat-to-up. But I say that with absolutely no conviction."
That's not stressing out Ashley too much. He now has exactly two months to close on his house to officially collect the $8,000 back on his taxes.
"It is a lot of money. You gotta work a lot of hours for that," Ashley said. "It could buy you a new kitchen, buy you new furniture."
He does hopes the market continues to stabilize. It would be a shame if the federal government spent billions trying to get more people into houses, only to see values drop again.
This program aired on April 30, 2010.