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Wanted: ‘For Sale’ signs

Tax-credit incentive helps some, but there aren’t enough SCV homes for first time-buyers

Posted: October 29, 2009 9:44 p.m.
Updated: October 30, 2009 4:55 a.m.
 
Santa Clarita Valley real estate agents would love to see the federal government’s first-time home buyer plan do for housing what “Cash for Clunkers” did for cars.

But in the SCV, there’s a hitch.

There aren’t enough homes to sell to a market flooded with prospective buyers, a local real estate agent said.

“This is one of the good stimulus package programs,” said Steve White, co-owner of Keller Williams in Valencia.

The program that has White so excited is the $8,000 first-time home buyer tax credit passed in President Barack Obama’s stimulus package. The program was scheduled to end Nov. 30, but it may get new life. The U.S. Senate has begun hashing out a deal to extend the program to April 30, 2010.

There is no timetable for passing a bill that would finalize the extension, but bipartisan support for the program in both the House of Representatives and the Senate, along with support of the White House, is likely to keep the program around.

However, White said he’s wary of calling the extension of the program a silver bullet that would end the real estate slump.

“Low inventory has negated many people from using the tax program,” he said.

That low inventory has a ripple effect that often keeps those new buyers from cashing in on the tax credit and landing their first home.

New buyers traditionally don’t have a large down payment saved. With so few homes on the market, the new buyers are often outbid by existing homeowners who are flush with cash, White said.

“They are getting outbid by cash buyers or people with whopping down payments,” he said.

Housing inventory in the Santa Clarita Valley sagged to a 3.1-month supply of homes, meaning the number of homes that would normally sell in a little more than three months, according to the Southland Regional Association of Realtors.

Local real estate officials would like that number to be closer to five or six months of housing stock, which is the standard for a healthy housing supply.

The lack of homes, according to White, is attributable to government-backed mortgage modifications that have kept many homeowners from foreclosure and effectively kept those houses off the market.

“If those homes were to flow into the market, there’s a lot of demand,” White said.

Lower home prices have fueled demand, sending plenty of potential buyers — first time or otherwise — into the market.

Danny Haleen, 22, of Castaic, is one of those first-time buyers. The firefighter isn’t necessarily looking for a tax credit, he said.

“It’s the perfect time to buy a home. The prices are as low as they are going to get, and so are interest rates,” he said.

Haleen’s story sounds a lot like many of the new home buyers. The recent slide in housing prompted many buyers who sat out the housing bubble to get off the sideline and in the market for a home, said Mary Funk, owner of Funk and Associates, which sells real estate in the Santa Clarita Valley.

“The new buyers got passed over in the previous market because the prices were too high,” Funk said.

The Associated Press contributed to this story.


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