Forty Percent of California's First-time Home Buyers Significantly Influenced by Tax Credit

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(News Source: California Association of Realtors)

(LOS ANGELES, CA) -- Nearly 40 percent of first-time home buyers said they would not have purchased a home if the federal tax credit for first-time home buyers was not offered, according to the California Association of Realtors (C.A.R.) "2009 First-time Home Buyers Tax Credit Survey."

Understanding the significance of the federal tax credit to the housing market's recovery, C.A.R. surveyed 200 California first-time home buyers to gauge the impact it had on their purchase decisions.

"It is clear that the federal tax credit for first-time home buyers is working, as evidenced by the spike in home sales in recent months," said C.A.R. President James Liptak.  "This tax credit is arguably the most successful strategy employed by the government's efforts to stimulate the housing market.

"Because the tax credit has helped so many first-time buyers become homeowners, it is critical that Congress extends the credit beyond the Dec. 1 deadline, and includes all buyers, not just first-timers," he said.

Nearly 70 percent of those surveyed said that the federal tax credit was either "very important" or "most important" in their decision to purchase a home.  When ranking the importance of the tax credit, those who planned to use the tax credit gave it a 4.5 on a scale of one to five, with five being "most important."  That rank was tied with low home prices.

In California home prices have declined 59 percent from the peak to the current low in this cycle--contrasting with the national picture where the prices have declined by 28 percent.

"While affordability has improved in California over the past two years, it is still lower than affordability nationally. As a result, the tax credit is an even bigger factor in California compared with elsewhere in the country," added Liptak.  "Going forward, the credit will be even more important to the housing recovery."

Income levels played a role in the decision of first-time buyers to apply for the federal tax credit.  Ninety-four percent of respondents who earn an annual income of less than $100,000 planned to apply for the credit, while only 51 percent of first-timers earning $100,000 or more planned to apply for it.

Other key findings from C.A.R.'s "2009 First-time Home Buyers Tax Credit Survey" include:

• Ninety-four percent were aware of the federal first-time buyer tax credit.

• Eighty-two percent listed the ability to obtain financing as "very important" or "most important."

• Ninety-one percent reported low home prices as "very important" or "most important."

• Twenty-six percent planned to use the tax credit to purchase home furnishings and 12 percent planned to use it for home improvements.

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