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18% of Prospective First-Time Homebuyers Say Extending $8,000 Tax Credit to 2010 Would be Primary Influence on Their Decision to Buy

Extension of Credit Could Sway Decision of 334,000 Potential First-Time Homebuyers, According to Zillow.com® Survey and Analysis

Sep 24, 2009

 

 

 

 

SEATTLE, Sept. 24 /PRNewswire/ -- Nearly one in five (18 percent) prospective first-time homebuyers said extending the $8,000 tax credit would be the primary influence on their decision to buy a home before the end of 2010, according to a Zillow® survey(1). That would equate to 334,000 buyers from Dec. 1, 2009 to Nov. 30, 2010 - a likely time period for an extension, according to additional analysis.

 

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Zillow queried adults who qualify as a first-time homebuyer, asking them if an extension of the tax credit would influence their plans to buy 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 analysis of current market trends shows that, if the credit were extended, a total 1.86 million(2) first-time homebuyers 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(3) in tax credits.

 

"Although nearly two million first-time homebuyers may receive the tax credit if it is extended for another year, the incremental impact of the credit is far smaller," said Zillow Chief Economist Stan Humphries. "These numbers suggest that extending the credit might bring an additional 334,000 homebuyers who would not otherwise purchase a home into the market. While 334,000 may seem like a small number relative to the total number of homebuyers who would claim the credit, their addition to the market next year could make the difference between a robust annual increase in home sales next year and a flat or negative change in home sales relative to this year.

 

"There's little doubt that 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. That said, the cost of bringing these additional homebuyers into the market is substantial. Assuming 1.86 million first-time buyers take advantage of the full credit once extended, this translates into an additional $14.86 billion in government spending. For every five homebuyers who receive the credit, four would have bought their home even without the credit."

 

The current $8,000 first-time homebuyer tax credit is set to expire on Nov. 30, 2009. Homebuyers who do not currently own a primary residence and have not owned one for the past three years can be eligible for the credit.

 

About Zillow.com®

Zillow.com is an online real estate marketplace where homeowners, buyers, sellers, real estate agents and mortgage professionals find and share vital information about homes and mortgages, for free. Launched in early 2006 with Zestimate® home values and data on millions of U.S. homes, Zillow has since added homes for sale, a directory of real estate and lending professionals, Zillow Advice and Zillow Mortgage Marketplace. One of the most-visited U.S. real estate Web sites, with more than eight million unique visitors per month, Zillow's goal is to help people become smarter about real estate in every stage of the home ownership process - home buying, selling, remodeling and financing. The company is headquartered in Seattle and has raised $87 million in funding.

 

Zillow.com, Zillow and Zestimate are registered trademarks of Zillow, Inc.

 

(1) Harris Interactive® fielded the Tax Credit study on behalf of Zillow from Aug. 28 - Sept. 1, 2009 via its QuickQuery(SM) online omnibus service, interviewing a nationwide sample of 2,175 U.S. adults aged 18 years and older, of whom 408 do not currently own a home as their primary residence and have not owned a home as their primary residence for the past three years, and who intend to buy a home before the end of 2010. . This online survey is not based on a probability sample and therefore no estimate of theoretical sampling error can be calculated. For complete survey methodology, including weighting variables, please contact press@zillow.com.

 

(2) Zillow estimates that 1.86 million first-time homebuyers could receive the tax credit if it were extended for an additional 12 months (from Dec. 1, 2009 to Nov. 30, 2010 - the likely time frame for the extension). Zillow analysis determined that 4,319,100 homes will likely be sold during the 12 months leading up to Nov. 30, 2009). Based on data from the National Association of Realtors, Zillow conservatively estimates that home sales will rise 5 percent in 2010 compared to 2009. That would mean that 5,158,755 homes would sell between Dec. 1, 2009 and Nov. 30, 2010 - the probable life of an extended tax credit. According to NAR, 36 percent of all homebuyers who purchased their home between March 2009 (the first full month after the credit was announced) and July 2009 were first-time homebuyers. Assuming 36 percent of all buyers would be first-time homebuyers during the life of an extended credit, 1.86 million who buy between Dec. 1, 2009 and Nov. 30, 2010 would be first-time homebuyers.

 

(3) If 1.86 million homes are sold to first-time homebuyers who qualify for the full $8,000 tax credit between Dec. 1, 2009 and Nov. 30, 2010, the total amount of credits given would be $14.86 billion.

 

 

 

SOURCE Zillow.com

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SOURCE: Zillow.com

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