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Published May 01 2010

Homebuyers rush to get $8K tax credit

First-time homebuyers pushed the deadline for a federal tax credit to the limit on Friday, scurrying to sign on the dotted line before the clock struck midnight.

“There’s definitely been a rush,” said Jill Jonason, a Realty 2000 agent in Fargo.

Buyers and sellers needed to sign an accepted purchase contract by midnight to take advantage of the $8,000 tax credit for first-time homebuyers or the $6,500 tax credit for certain repeat buyers.

“I have people that called (Thursday) that said, ‘I want to still get in on that tax credit,’ ” said Peggy Isakson, president of the Fargo Moorhead Area Association of Realtors.

Some waited too long.

Isakson said one client called her Coldwell Banker line on Thursday, asking to see a house for the second time on Friday. But the seller’s husband was out of town and unreachable by phone until Sunday.

“So we can’t make it happen … because there’s no way we’d be able to get both signatures on it by midnight,” she said.

Jonason said she was meeting a client to sign a contract at 10 p.m. – one of four sales she planned to finalize on Friday. Agents would be taking calls right up until midnight if necessary, she said.

“We’re all available to get the last hurrah,” she said.

Friday’s deadline marked the end of the federal government’s two-year effort to re-energize the slumping housing market.

Congress approved the first-time homebuyer tax credit worth up to $7,500 in 2008. Lawmakers extended it twice, increasing the credit to $8,000 and adding a $6,500 credit for certain repeat buyers.

Those who met the deadline must close on their homes by June 30.

First-time homebuyer Amanda Bray, a 29-year-old dental assistant, closed on her two-story house a week before Friday’s deadline, having signed a contract in early March.

Bray said she grew tired of apartment life and house-shopped for just over a month before finding a townhouse in south Fargo with a green lawn for her pug, Lola, to run around.

“I had been kind of playing it over in my head, ‘Should I do it?’ ” she said. “And finally I just said, ‘Now’s the perfect time. How can you give up $8,000?’ ”

Two co-workers also will move into newly built houses next week, and one of them used the repeat homebuyer credit, she said.

“We’re all sharing moving boxes,” she said.

Overall, the tax credit program “has been fantastic” for the housing industry, Jonason said.

April sales figures weren’t available yet, but the Realtors association saw sale contracts soar by 72 percent through March compared with the first quarter of 2009, said Judy Gehrke, the association’s vice president.

The number of closed sales jumped by 21 percent, and the total dollar volume of closed sales increased by 28.5 percent, said Gehrke, who marked the program’s end Friday by donning the red jacket she wore in TV commercials promoting it.

In March alone, contracts were up a whopping 134 percent over March 2009, when record flooding essentially brought business to a standstill.

Dan Madsen, a broker at Metro Realtors in Fargo, said the incentive program boosted sales and listings over April 2009 and led to a “very active” market.

Agents predicted a slight slowdown in activity now that the credit has expired but added the local housing market is stable with buyers and inventory.

“I think the people that didn’t find the home that they really wanted, it’ll give them a chance to take a breath and maybe regroup and reconsider and find the home that they really, really want rather than jump into something for a tax credit,” Madsen said.

Credit still available to certain service members

Armed Forces members and certain federal employees serving outside the United States have an extra year to buy a house and still qualify for the credit, according to the IRS.

They must enter into a binding home-purchase contract by April 30, 2011, and close by June 30, 2011.

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Readers can reach Forum reporter Mike Nowatzki at (701) 241-5528