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When economist Paul Brewbaker cracked this week that the government’s $8,000 tax credit for first-time homebuyers affected only a handful of sales in Hawaii, no one in the audience of several hundred real estate executives disputed it.
For all the hoopla last month about the burst in sales generated by the tax credit, it’s difficult to assess whether it’s driven many Hawaii sales.
While some Realtors say they had several first-time buyers close sales in the past month, others said they’re actually seeing investors return to the market. The tax credit was due to expire on Monday but has now been extended for six months.
Either way, the fact remains that sales have been steadily rising since bottoming out at the start of 2009.
Brewbaker, speaking at a brokers’ forum sponsored by the Honolulu Board of Realtors, pointed out that the peak in home sales, at least on Oahu, happened in November 2004.
Since then, sales have declined, with the trough hitting in January, when 122 single-family homes and 159 condominiums sold.
Since then, sales have risen steadily on Oahu, and October showed gains on most of the Neighbor Islands as well.
The $8,000 tax credit was limited to first-time homebuyers earning no more than $75,000, or $125,000 for a couple. If it did have some effect, that would mean there could be risk of sales starting to fall again after the extension expires.
“At some point you take the training wheels off again,” Brewbaker said.
The National Association of Realtors said this month that 47 percent of all home sales nationally were to first-time buyers, up from 41 percent in 2008 and the highest figure since 1981.
But how much influence the tax credit had on Hawaii sales is difficult to measure.
With median home prices still above $600,000 on Oahu, it’s a tough market for even well-paid professionals to break into, let alone first-time buyers.
“We don’t have any way of tracking whether it’s due heavily to first-time homebuyer activity or otherwise,” said Berton Hamamoto, president and principal broker of Property Profiles Inc., and a past president of the Honolulu Board of Realtors.
While the credit may have sent some people out into the market for the first time, it more likely was the push that some browsers needed to get off the fence and buy, he said.
“The indication out there is of course it has helped, it hasn’t hurt,” Hamamoto said. “It is yet to be seen whether that thing drops off after the tax credit.”
In addition to extending the expiration date, the income limits for the $8,000 first-time tax credit were raised to $125,000 for single buyers and $225,000 for couples. Congress also added a $6,500 tax credit for existing homeowners provided they have lived in their current home for at least five of the last eight years.
Prudential Locations, which offered the first-time buyers an advance on the $8,000 tax credit, definitely saw a boost because of it, said Executive Vice President of Sales Scott Higashi.
“We gave out $1 million, but we had a lot more buyers than that,” he said.
The $1 million would equal $8,000 advances to 125 buyers.
The extension means there could be some momentum through the traditionally slow holiday period, Higashi said.
Some of that activity is from first-time buyers, or “property virgins” as they’re called on a popular cable television show, who were trying to beat the original deadline but couldn’t find the right house or condo.
