Some first-time home buyers will get a boost in 2013 due to a new tax credit, according to Mary Little, regional retail manager at Northwest Bank.
Offered through the Iowa Finance Authority, the "Take Credit!" program will offer up to a $2,000 federal tax credit for first-time home buyers who meet certain requirements.
"The applicant must meet Iowa Finance Authority income requirements, which vary by county," Little said. "Of course, the home must be in Iowa. And the borrower needs to be either a first-time home buyer, a military veteran, or purchase a home in a targeted area."
-Messenger photo by Hans Madsen
Lori Owen, office manager at the Webster County Assessor’s Office, looks over some of the paperwork recording a home sale. Each folder is one home.
Those who qualify will receive a tax credit deducted from their federal income tax liability, equal to 50 percent of the annual interest they paid on their mortgage loan.
For example, Little said, consider a 30-year loan of $75,000, with a 3.5 annual percentage rate. In one year's time, the interest on that loan would cost $2,382. The tax credit would then be worth $1,191.
More information on the program can be found at http://is.gd/IFAtakecredit.
"It's definitely something that's very advantageous for the people that qualify. It's something that anyone looking at buying a home should look into," she said.
"I believe it will bring first-time buyers back," said Troy Anderson, broker and co-owner with RE/MAX of Fort Dodge, and this year's president of the Fort Dodge Board of Realtors.
First-time buyers had it tough in 2012 for two reasons, Anderson said. The continuing backlash from the housing crisis means it's harder for them to get a mortgage. And the federal program in 2008-2009 which increased first-time buyers then actually led to lower numbers now.
"When they gave up to an $8,000 tax credit to first-time buyers, those people came into market pretty heavily in 2008-2009," he said. "So it essentially stole buyers from the future. They came into market earlier to get under that program."
Little said, "I wouldn't say it's hard to get a loan, it's just that new regulations and a little bit more scrutiny in the financial industry has led to a little more paperwork, a little more documentation.
"But still, we look at the same things when we evaluate a borrower and a credit application."
The year 2012 was a good time for home sales, and Anderson hopes to see those numbers again in 2013. Total homes sold was up 31 percent from 2011 to 2012, and the average sale price was up 47 percent, he said.
Little said, "The interest rate has been quite favorable for people buying, and for people refinancing.
"It's actually been busy for several years, but in 2012 it's probably been the busiest we've had, in both purchases and refinances."
Anderson said demand for housing in Fort Dodge remains high.
"We've had a lot of high-end sales" in 2012, he said, particularly in the range over $200,000.
Going forward, he anticipates more need in the $120,000 to $200,000 range.
"That range is in need of inventory," he said.
In fact, one of the challenges of 2013 will be home availability.
Plenty is being done to address that, though. Anderson is representing the Greater Fort Dodge Growth Alliance for four homes they built in the Woodlands area on the northeast end of town.
"They're trying to show that you can affordably build a spec home and sell it, and make a profit in this market," he said.
The encouragement seems to be working.
"Last year was a record year for building," he said.
There were 16 new homes completed in 2012, said Webster County Assessor Jeanette Thanupakorn.
Though that may seem lower than the 18 houses completed in 2011, that number doesn't take into account homes that are currently under construction.
"There are more homes being built right now than we had in the past," she said.
The assessor's office is required to assess property values based on the market values. The difference between the assessed value and what a property actually sold for is expressed in the sales ratio.
In 2012, the median sales ratio was 101.20 percent. That means the assessed value was slightly higher than the sales price.
In 2011, the ratio was 101.33 percent.
"It didn't change," Thanupakorn said. This means the market has been very stable, she said.
"If we started seeing houses selling much less than they're valued at, that would mean we're oversaturated with houses," she said.
In other words, too many houses would cause the sales ratio to go up, while not enough houses would cause it to go down.
However, Thanupakorn said she doesn't see a lot of the supply and demand at first because she only deals with assessment.
"When you're talking about what is the economy doing, what are the trends, that's where you'd want to be talking to contractors and Realtors, because they know who's looking for what, and how much is available, and how much needs to be built," she said.