RALEIGH — Shannon and Jeremy Wallace were ready for a change. The Raleigh couple was tired of living in a one-bedroom, one-bathroom apartment in North Raleigh. His commute to Clayton was long, their space was cramped, and their dog, Cody, needed a little more terrain.
"We're throwing away $700 a month on our apartment," said Shannon Wallace, 27, a social worker in downtown Raleigh. "There was really no point for us to be giving them money when we could be paying most of our mortgage with that amount."
Slack demand, falling prices and the chance of a low mortgage prompted them to hunt for a home of their own. But it was the promise of up to $8,000 in tax savings from Uncle Sam that convinced them to put a home under contract.
The couple found a three-bedroom, two-bathroom ranch house in Knightdale on which they expect to close this month.
The first-time homebuyer's tax credit, which expires Nov. 30, is the second such effort designed to help reduce a glut of inventory left over from the boom. As the deadline for receiving the credit approaches, local real estate agents say it's doing just that. And while some in Congress are pushing for an extension, nothing is firm.
"In the last few weeks, man, we have definitely been more active. And a lot of it is from first-time buyers," said Ross Rhudy, general manager of Ammons Pittman GMAC Real Estate in Raleigh. About one-third of his business today comes from first-time buyers, compared to roughly one-fifth a few years ago. "That deadline is looming, and the ones that are aware of it ... are starting to think, 'I'd better get off the fence.'"
In one of its many efforts to revive the economy, the federal government thought it would be a good idea to put money in the pockets of prospective buyers, to help repair the industry that is largely blamed for the downturn.
"It won't move everybody off the fence," said Stacey P. Anfindsen of Cary-based Birch Appraisal Group, who analyzes Triangle housing data for area brokers. "But it'll move enough people off the fence to get things churning."
And that could be good for buyers up the line. As starter homes are sold, sellers can move up or move on, leading to sales elsewhere and helping to loosen a jammed industry.
The Triangle, which avoided the early brunt of the bust, saw sales slow to a decade-low in the first half of this year. A seven-month supply of unsold homes still lingers on the market, up from the three-month supply that was typical during the boom, according to Triangle Multiple Listing Services.
The Internal Revenue Service reports that at least 1.1 million buyers have applied for tax credits through amended returns. More are expected when income taxes are due in April. The agency could not provide a breakdown by state, but local data suggest the credit is already having an effect on regional sales.
During the second quarter, 41 percent of all homes sold in the Triangle were below $200,000, according to Metrostudy data. That's the biggest share for that segment since 2005. Area brokers say that first-time buyers typically buy homes priced under $200,000.
Through the first half of the year, sales of existing single-family homes below $120,000 are up 43 percent over the same period last year, according to Market Opportunity Research Enterprises, a Rocky Mount group that tracks Triangle housing trends. That's the first increase in that category in at least three years.
In June, about half of the region's top-selling communities had average prices of below $200,000, down from one-quarter last year, according to Triangle Multiple Listing Services data.
While the tax credit is a deal maker for some, others such as Bert Davis were lured by falling prices. The credit will be gravy.
Davis is a chemist who works in Wilson. After renting in Cary for years, he started looking for a home to buy closer to work. He was buoyed by low mortgage rates and falling prices. "The housing market has hurt a lot of people," Davis said. "But it's helped me out."
He found a new home in Knightdale's Churchill neighborhood. It's near the U.S. 64 Bypass, offering easy access to Wilson. It was listed at $175,000. He put it under contract for $163,000. He closes later this month. "I got more house than I could have afforded a couple years ago, and more house than I could afford a few years from now," he said. "I just kind of lucked out."
Part of his tax credit will go to a new fence. The rest will go into a rainy day fund.
With that in order, Davis, 27, can focus on other pursuits.
"I'm single, working, own a house," he said.
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