Tax Credits Boost Sales of Wisconsin Bank Foreclosure Homes

by on States

Industry experts and analysts agree that the federal government’s $8,000 tax credit for first-time homebuyers have helped tremendously in lifting sales of bank foreclosure homes in Wisconsin.

Many potential homebuyers flocked to the market not only to take advantage of the tax credit but also the reduced home prices and low interest rates. These factors helped entice many people to purchase their first houses and help trim down the number of foreclosure properties that have been pulling home prices and values.

Industry analysts and experts said that the tax credit had made an impact on the local and national home sales. For example, in Milwaukee, tax credits helped lift sales for two succeeding months as potential homebuyers hurry to find a foreclosed home and close a sale before the December 1 expiration of the tax credit.

However, analysts are questioning whether the momentum could be sustained even after the tax credit expiration.

They pointed out that home sales may have picked up locally and nationally, but prices remained at the lowest end. Nationally, median home prices dropped below the normal level, a little more than twice the family income. The home price trend is influenced by the sale of a great number of bargain-priced starter homes.

The average home price in Milwaukee dropped to its 2004 level. Analysts said that the contrasting movement between home sales and prices indicated a return to the normal market conditions. They said that backlogs of unsold properties are starting to dwindle as buyers try to take advantage of tax credit and reduced mortgage rates.

Furthermore, industry analysts said that the dwindling of home inventory is an important step towards price stabilization, adding that declining inventory indicates home values is nearing stabilization.

On the other hand, affordability has dramatically increased with the drop in home prices. But the growing unemployment rate is threatening the financial capability of people to purchase properties.

The nationwide unemployment rate was 9.7 percent while jobless rate in Wisconsin was 8.7 percent. But economists are expecting unemployment to level off in the middle of 2010. Unemployment has forced many homeowners to miss their monthly mortgage payments which eventually led to foreclosures. Last month, foreclosure filings were made on 2,729 Wisconsin properties, an increase of 10.9 percent from the previous month and 52 percent compared with 1,793 properties in July 2008.