Tax credits inject hope into Central Pa. real estate market

Midstate real estate agents said they are confident the extension of the federal first-time homebuyer tax credit and the addition of a tax credit for homeowners looking to move will help resuscitate the region's housing market.

Even though the last $8,000 tax credit for first-time buyers didn't boost regional year-to-date sales over last year's numbers, it helped trigger more third- and fourth-quarter deals, agents said.

In Lancaster County, 3,579 houses were sold during the first three quarters of 2008, according to the Lancaster County Association of Realtors. This year, it dropped to 3,300 through the first three quarters.

But more people started buying houses in Lancaster County as the Nov. 1 deadline approached for the tax credit. Sales in the county during this year's third quarter were up 10.8 percent compared with the same period last year, according to the Realtors association.

Under the extension, first-time homebuyers and homeowners who have lived in their houses for at least five years have until April 30 to start the home-buying process. First-time buyers can get an $8,000 tax credit. Homeowners are eligible for a $6,500 credit. All buyers have to settle purchases by June 30 to get the credit.

Scott Ulrich, president of the Lancaster realtors association, said he would have liked to have seen the recently adopted tax credit legislation offer the $8,000 credit to both first-time and current homeowners planning to move. But anything is better than nothing, he said.

In York County, a similar scenario has unfolded.

There were 3,343 houses sold through October, according to the Realtors Association of York and Adams County. Last year, 3,384 houses sold through the same period. But the number of houses sold in October increased by 38 percent compared with October 2008.

The Harrisburg region has seen the same housing sales trend that Lancaster and York counties have experienced. Combined numbers in the greater Harrisburg area show that house sales were off during the first three quarters compared with the first three quarters of 2008, according to the Greater Harrisburg Association of Realtors. But sales have recently increased. What the association considers the Harrisburg area includes Cumberland, Dauphin and Perry counties.

Lebanon County experienced the same, too. Year-to-date sales through Oct. 31 in Lebanon County were down compared to last year, according to the Lebanon County Association of Realtors. There were 1,001 houses sold through the first 10 months of this year, down from 1,054 sold during the same period last year.

But third-quarter sales grew in the county. There were 362 houses sold during this year's third quarter, up from 327 during the third quarter last year, according to the Lebanon Realtors association.

Sales were up during the third quarter in the Harrisburg area compared with the same period last year, according to the Harrisburg Realtors association. It was the first time since 2007 the number of houses sold in the Harrisburg area grew during any comparative quarter, according to the group. There were 2,180 houses sold during the third quarter in the area, up from 2,127 sold during the previous year's third quarter.

If the real estate market is doing well, the economy feels the ripple effect because so many different industries -- including construction and real estate- are involved in building a house, said Fred Briggs, president of the Harrisburg Realtors association.

"I really believe (the stimulus) is a good thing," Briggs said. "My concern is you reach a point where buyers start waiting to see what else the government offers."

But this round of tax credits probably will mark the last time the government offers homebuyer tax credits for a long time, Ulrich said. And the shorter deadline to take advantage of the credit during the second round will get people to buy houses quicker, he said. Customers had almost the entire year to buy a house in 2009.

Briggs said he thinks the real estate market will turn the corner during the first and second quarters of next year. Following that, he said, a sales wave will start to approach. And it will at least equal the number of sales when times were good, from the mid-1990s to 2005.