According to a survey released in December 2009, first-time home buyers have had a larger impact on the New Jersey real estate market than in recent years. The 2009 Profile of New Jersey Home Buyers and Sellers reported that the number of first-time buyers rose to 52 percent, up from 49 percent in 2008 and 36 percent in 2007 (www.njar.com).
One can certainly infer that the introduction and recent extension of the first-time home buyer federal tax credit of up to $8,000 has attracted buyers to homes in New Jersey.
The Obama administration unveiled the credit in early 2009 as part of the American Recovery and Reinvestment Act economic stimulus package. The Worker, Homeownership and Business Assistance Act later extended the sale deadline through April 30, 2010.
Repeat buyers of homes in New Jersey and nationwide also have the opportunity to secure a $6,500 tax credit as part of the extended government program.
The New Jersey Association of Realtors survey results indicated that 56 percent of first-time buyers fell between the ages of 25 and 34. Asked to provide a reason behind the motivation of their purchase, 46 percent of first-time buyers revealed that it was just the right time (www.njar.com).
This response suggests that the tax credit program has delivered the desired impact. Even though pending home sales dropped by 16 percent nationwide in November, regional figures point to a slow climb back in terms of pricing and sales.
“2009 was a tremendous year for first-time home buyers and it appears as though the trend will continue into 2010 with the extension of the $8,000 tax credit until the spring,” New Jersey Association of Realtors President July Appleby said. “Current homeowners considering selling their homes should be encouraged by the increasing number of first-time buyers in New Jersey’s real estate market,” (www.njar.com).
As several months remain prior to the expiration of the tax credit program, some are concerned with the effect its termination may have on sales of homes in New Jersey. When one considers the prospect of a potential interest rate hike – the federal funds rate has remained at or near zero for more than a year – paired with the end of the tax program, the future remains cloudy.
It remains perfectly clear, though, that first-time home buyers will continue to drive real estate sales in the near term.
