Housing stimulus program nears end
WORTHINGTON -- With just one month to go before the federal Worker, Homeownership and Business Assistance Act of 2009 (otherwise known as the housing stimulus program) expires, local realtors are seeing continued strength in the housing market.
Overall, realtors say the stimulus program has been good for the local economy. It offers up to an $8,000 credit for qualifying first-time homebuyers and up to $6,500 for people who have owned their present home for five years or more.
"The market in Worthington has always been pretty stable and I'd say good perhaps, in comparison to the rest of the country," said Larry Janssen, owner of Janssen Realty in Worthington.
"It has been a good market in Worthington, and it is an excellent time to buy. I think it's a good stimulus -- not only for Worthington but in the state of Minnesota."
The housing stimulus program initially began on Jan. 1, 2009, and was to continue to Dec. 1, before an extension pushed the program to an April 30 deadline.
Steve Johnson, broker with Johnson Builders & Realtors, said it's difficult to measure just how much of an impact the stimulus program has had on local home sales.
"The market was very good in 2009, and it's been very strong in 2010," he said, adding that the local realtor company sold 10 homes in March and listed another 15.
"I think (the stimulus) has had a mild impact," said Johnson. "There have been a number of people who have taken advantage of it. It for sure took the people on the fence and nudged them in that direction.
"It was beneficial to us, without question," he added. "(Prospective buyers) would take it into consideration with their offers, knowing they were going to have this opportunity."
Real Estate Retrievers' broker-owner Matt Larson said he's seen a bit of a frenzy in the last couple of weeks, as home buyers are trying to complete purchase agreements before the end of April.
"We've actually seen a lot of activity lately," Larson said. "When it hit $8,000 in January 2009, it didn't pick up that much right away. It seemed like mid- to late-summer it picked up because they knew they had to close on (a purchase) by Dec. 1. When they extended it, it wasn't a real rush, but now it's really gotten busy again."
Larson said by and large the program was most popular among first-time homebuyers.
"I don't know if that's education. I thought it would be a lot busier with the $6,500," he said.
Both Johnson and Janssen said the program was popular among people who were renting an apartment or single family home.
"We had many renters that took advantage of it," said Johnson. "It's amazing how many new people are coming into our community, also."
While the stimulus money promoted home ownership, it also helped boost other sectors of the economy.
"If they knew they were going to get that housing credit, that was like cash to them," said Janssen. "They could use it for drapes, furniture, plumbing.... That's what (the government is) trying to do is stimulate the economy. There's so much more than just the house -- it can be used for any home improvement-type project."
It's hard to say whether the tax credit caused some people to look at purchasing a higher-priced home. Those who qualified didn't get the money until after closing was completed, and there's no way of knowing how many took that money and made a big house payment with it.
"The younger buyers were looking at how much they wanted to put in their budget for a house payment," said Johnson. "(The stimulus) didn't help them with their payment, but with some well-needed cash in some cases."
Though getting a nice chunk of change from the government for making an investment in personal property has certainly been a perk for some people, Johnson said prospective home buyers still put a lot of thought into a home purchase.
"I have had a number of people tell me they'd like to get the $8,000, but they aren't going to rush into something just because of it," he said.
While rushing into a home purchase is never a good idea, doing so in this economy may not be easy anyway.
Johnson said financing requirements have tightened in recent months, which makes it a challenge for some prospective buyers to receive a home loan.
"Financing has become one of our largest challenges," Johnson said. "We do a lot of Rural Development (loans), and they are not doing any financing in the flood zone, so that's a bit of a challenge. FHA is now limiting the prepaids a seller can pay for a buyer, and that will be part of the new requirement (in its agency.)"
Johnson said his business, along with local lenders, are meeting those challenges and getting through them, but it takes some extra work.
The next challenge on the horizon, at least in Nobles County, is a new requirement that septic systems be in compliance at the point of transfer between existing and new tenants, said Johnson. The rule affects all homes located outside city limits, including acreages and farms.
The housing shortage in Worthington has been felt for several years, although local realtors say the availability of homes is holding steady.
"I'm carrying a pretty good inventory," said Janssen, adding that the less expensive homes continue to move quicker on the market. "The inventory is probably down a bit on that lower price range."
Johnson said in most cases, a buyer in the community is also a seller in the community, which helps to maintain selection.
"We did have a number of buyers that were relocated because of MnDOT, and there was no house that came on the market," Johnson said. "(That) affected the housing situation, but we have a very nice inventory now. Spring is oftentimes when people make a decision to put their home on the market."
Larson said sales at Real Estate Retrievers have been tremendous, but "there aren't nearly as many homes (on the market) as there should be."
"I think Worthington is actually one of the strongest markets we're in," he said. "I think the tax rebate has helped, and the fact that there hasn't been major layoffs or shutdowns to the extent there has been in other communities.
"In some communities we're in, there have been major layoffs," Larson added.
With the April 30 deadline looming for the housing stimulus funds, the realtors say they are looking forward to a busy few weeks ahead.
"I hope that we get some activity here before the 30th," Johnson said.
"It's spring, the sun is shining and people are much more positive -- you can see the property now," added Janssen. "It's an excellent time to buy with the stimulus package, and interest rates are great."