Pinellas County Realtor Steve Capen's clients were hot for the $8,000 first-time home buyer tax credit, but right around September, business started turning cold.
It's easy to see why. Most of his buyers sought short-sale homes — those that sell for less than their mortgage debt — and feared banks wouldn't consent to the sales before the credit expired Nov. 30.
Capen's resting easier these days thanks to Washington's decision to extend the home buyer credit to June 30 and expand it to include some home buyers who already own homes.
"A lot of people were still going to buy houses, but the credit's getting them to move quicker," said Capen, an agent with Keller Williams Realty in Seminole. "On the lower-end stuff — homes under $200,000 — most of the buyers use it."
That encapsulates the pluses — and the possible shortcomings — of the government's re-commitment to the multibillion-dollar housing subsidy.
As an enticement to former renters to join the ranks of home ownership, the $8,000 credit has been a success. An estimated 1.4 million first-time home buyers across the country have grabbed the freebie this year. It also helped prop up underemployed real estate professionals.
The stimulus also helped the Florida housing market reabsorb tens of thousands of foreclosure homes that otherwise might have lingered on the listings.
But local housing experts doubt widening the credit to take on home buyers who already own homes will generate a similar beneficial bang. The government will offer those buyers a credit of $6,500 as long as they've lived in their home for five of the past eight years.
Why won't it help as much? Many are so-called move-up home buyers, those looking to buy a more expensive home. More expensive homes are harder to finance. And the more a buyer intends to spend, the smaller the percentage of the overall price the tax credit represents.
Also, if you're trading one house for another, it's not improving overall home ownership. And who's to guarantee you'll be able to sell your old house to move into a new one?
"Once you get out of the first-time home buyer range, getting a mortgage becomes more difficult," said University of Central Florida economist Sean Snaith. "This is no magic pill, but it does chisel away at the problem."
Home builders have been cheerleaders for the housing credit. No surprise: Tampa Bay new home sales have fallen about 80 percent since 2005. Close to a dozen builders have left town, gone bankrupt or ceased operations since 2006.
Since new homes generally cost more than foreclosure homes, some builders lobbied for an even larger credit of up to $15,000.
"We feel the move-up credit is a step in the right direction, but we are not confident that the amount is enough to get many move-up buyers," said Mark Metheny, who runs Lennar Homes' operations in Tampa Bay and is offering to double the $6,500 credit out of the company's coffers.
One surprise in the bipartisan bill was the decision to raise income limits for home buyers using the credit. Single taxpayers will quality if they earn up to $125,000. The old cap was $75,000. Married couples' income limit rose from $150,000 to $225,000.
Reed Williams runs the Buyers Home Store on State Road 54 in Land O'Lakes, a one-stop home buying emporium taking in new home subdivisions all over Tampa Bay.
For most homeowners who bought since 2003, the credit doesn't make much sense. They're probably underwater on their mortgages. Even people who bought many years ago, but refinanced during the boom, could be underwater and unable to sell their existing homes.
But if they've piled up equity living in the same house longer term, the credit is a boon, Williams said. It could also help homeowners who are looking to downsize.
"We were doing a big cheer Thursday when the House of Representatives passed it," Williams said.
He noted the extension of the credit to June 30 leaves plenty of time for house hunters to build new homes from scratch.