Uncategorized

By Angela Murphy on September 24, 2009

NEW YORK, Sept 24 (Reuters) – Nearly one in five prospective first-time U.S. home buyers said a possible extension of an $8,000 tax credit would be the primary influence on their decision to purchase a home before the end of 2010, according to a survey by a real estate website.

The 18 percent who would be swayed by the move equates to 334,000 buyers who would otherwise not purchase homes from Dec. 1, 2009 to Nov. 30, 2010 — the likely period for an extension, according to the survey published by Zillow.com on Thursday.

Their addition to the market could make the difference between a robust annual increase in 2010 home sales and a flat or negative change, Zillow.com said.

“(An extension of) the tax credit will boost demand at the margin, and that fact will make it easier to work down our current high inventory levels of existing homes on the market,” Stan Humphries, Zillow chief economist, said in a statement.

The $8,000 first-time home buyer tax credit is part of a U.S. stimulus bill to combat the worst economic downturn to hit the United States since the 1930s.

Home buyers who do not currently own a primary residence and have not owned one for the past three years are considered for the credit.

There is speculation the U.S. government could try to pass legislation through Congress to extend the credit for another year. Alternatively, it may scrap the scheme on expectations the U.S. real estate market can recover under its own steam.

In the Zillow.com survey, the Seattle, Washington-based website queried adults who qualify as a first-time buyer and asked them if an extension of the credit would influence their plans to purchase a home before the end of 2010.

If the credit were extended, of those who intend to buy a home, 18 percent called the credit the “primary influence” in their decision, 25 percent said it would be a “significant influence,” and 27 percent said the credit would have “some” influence on any home buying decision. Thirty-one percent said it would have no influence on their decision.

Zillow’s analysis of current market trends shows that, if the credit were extended, a total 1.86 million first-time home buyers would purchase homes between Dec. 1, 2009 and Nov. 30, 2010. If all could take advantage of the full $8,000 tax credit, this could mean up to $14.86 billion in tax credits.

(Reporting by Julie Haviv; Editing by Andrew Hay)