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Extra Credit 

That $8000 from Uncle Sam is making homebuyers out of fence-sitters

Josh Slocum looked for his first house for more than six months before he found the one. The 140-year-old Cape Cod in Winooski wasn’t huge — about 1000 square feet — but it was just what he wanted. Slocum, 35, organized his financing and put an offer on the house last January. Because it was a short sale — a sale whose proceeds are less than the balance owed on the property’s loan — the seller’s bank got involved, and it took a while for Slocum’s offer to be approved.

When he finally closed on the property in August, Slocum, the executive director of the South Burlington-based nonprofit Funeral Consumers Alliance, realized the closing costs and the costs of initial repairs were a little more than he could handle. But his status as a first-time homebuyer qualified him for the $8000 federal credit. Knowing that he’d have that money coming his way, Slocum felt comfortable borrowing from friends to cover the closing costs and those basic repairs.

Three months after he filed for his credit, Slocum received an $8000 check in the mail, signed by Uncle Sam. “It felt like the Publishers Clearinghouse,” he recalls. “But it wasn’t like it was play money.” That cash went straight to the friends who helped him out. What was left over went into a kitty for future home repairs.

Slocum says the credit was a huge incentive. It’s a common refrain among many first-time homebuyers who have taken advantage of the government’s effort to help spur the sluggish housing market. It’s difficult to measure the precise impact of the program, but local real estate agents and market watchers say it’s definitely having an effect.

When compared to the cost of a new, entry-level home in this market — somewhere in the neighborhood of $250,000 — eight grand doesn’t seem like very much. But when a new buyer has drained his or her savings for the down payment and is living lean after paying for inspections, repairs and the closing, the extra cash is a nice little boost. Slocum doubts that he could have bought his home without it.

In 2008, the Housing and Economic Recovery Act authorized a credit of $7500 for first-time homebuyers. A year later, the American Recovery and Reinvestment Act expanded that credit by $500. The credit does not apply to single people with incomes of $125,000 or more, or couples with a combined income of more than $225,000. In November, Congress extended the credit, but despite the expansion and extension, few in the industry expect the credit to be extended after it expires in July.

That means first-time homebuyers must have a house under contract by May 1, 2010, and must have closed on the property by July 1, 2010, in order to be eligible. Existing homeowners who are looking to move up are also eligible for a $6500 credit if they have owned their current property for five years or more.

Apparently, say Vermont real estate professionals, the money is working to bring people into the market. Statistically, says realtor Chris von Trapp of Coldwell Banker Hickok & Boardman Realty, the credit has “done its job.” New home sales are lagging, but existing homes in the low to middle price range are moving. Two years ago, 30 percent of von Trapp’s buyers indicated they were first-timers; this year, that figure has climbed to 53 percent. “It doesn’t get any better than this with low interest rates and the stimulus,” von Trapp says.

In October and November 2009, just before the credit was extended, area real estate agents saw a huge rush in the number of first-time homebuyers seriously looking to purchase property. People wanted to get the $8000 to which they were entitled. Bob Hill, vice president of the Vermont Association of Realtors, is seeing the same crazed house hunting now, as first-timers realize they have just 60 days to get a house under contract.

After a drop-off in sales in December and January — historically slow months for real estate — interest in the market from new homebuyers rose to fever pitch, Hill claims. “The point of the credit was to get people off the sidelines and get them to make a decision,” Hill says. “It’s definitely working. Houses under $250,000 are moving.”

While the Vermont Real Estate Information Network doesn’t have exact numbers of first-time homebuyer sales in the state, Kathy Sweeten, the organization’s executive vice president, confirms that sales activity in Vermont has shot up in the last couple of months. In 2008, 789 single-family homes were sold in Chittenden County. Last year, that number jumped to 889. She attributes the increase not only to the tax credit but to the fact that home prices have stabilized in the region and the housing inventory is good. “We definitely have a healthy market here,” Sweeten says.

Emma Mulvaney-Stanak knows that to be true. When she began looking to buy her first home last summer, entry-level housing was being snatched up as soon as it was put on the market. As the tax credit window began closing, it became harder to find an affordable property. When she finally landed on a house she could afford, she pounced on it. “I offered the asking price,” she says. “I just had to throw open the checkbook because I was worried it would get snatched up.”

The opportunity was so good she gave up her seat on the city council to take advantage of it; she had lived in Burlington’s Ward 2, but the new place was in Ward 3. When she moved, she was required to step down. Last Tuesday, her new neighbors voted her back on the council, representing Ward 3.

The 29-year-old closed on her two-bedroom house in Burlington’s Old North End right before Thanksgiving and says she is looking forward to getting her $8000 check. The credit, she says, will “accelerate the exciting part of home ownership.” She plans on using part of the money to redo her bathroom, which, she reasons, will help the local economy. “I’m putting money back into the community and someone else will benefit from the credit,” she says.

Meredith Haff, a first-timer from Stowe who works as the marketing director at Concept2, plans on using her credit to “replenish the reserve,” which was drained shortly after she purchased her condo. She spent the first six months painting her place and making it her own. The credit, which she hopes to get in a couple months, will go toward reimbursing herself.

Like Slocum and Mulvaney-Stanak, Haff, 31, was pushed to take the plunge in part because of the credit. It was the incentive she needed to make a move now rather than wait around. “Knowing some of that money might come back to me made it seem less of a scary deal,” Haff says. Not only does she have $8000 coming her way, but she also has the satisfaction of knowing she did her part to stimulate the economy. Like all home purchases, Haff’s had a modest trickle-down effect on the economy. But cumulative housing sales help keep realtors, real estate attorneys and mortgage brokers in business and inspire confidence in the market.

Increased activity due to the credit, and to historically low interest rates, has a downside, though — first-time homebuyers in the region may find it hard to locate a property in the low to middle price range. The average length of time a two-bedroom home sits on the market is just 60 days, von Trapp says, making it a true seller’s market.

Most houses under $300,000 are getting multiple offers, and many of them are selling for the asking price. That means first-timers have to get aggressive if they’re going to land in their dream house. Average buyers in that price range lose the first two properties they think about putting a bid on.

“If you walk into the one and it’s the one,” von Trapp advises, “you have to buy it today.”

Want a house?

To find out more about the first-time homebuyer credit and how to receive it, visit,

The Real Estate Issue

Open House

As Seven Days was planning this issue, a relic from the boom times turned up in our office — the real estate issue of the Sunday New York Times Magazine from March 6, 2006. One of our editors found it in a folder of story ideas. Its 200 colorful pages include numerous ads for luxury homes and condos, and even a full-page spread offering “discount mortgages.” How times have changed. Flipping through it four years later — in the wake of the mortgage-default crisis and recession — we can’t help wondering which of the developments noted in the Times has gone belly up; the billionaire real estate tycoon it profiled is currently in bankruptcy court and might go to jail.

Vermont hasn’t escaped this catastrophe unscathed, but the state hasn’t been hit as hard as most. Vermont has the lowest rate of past-due mortgages in New England, according to the Mortgage Bankers Association’s National Delinquency Survey for the fourth quarter of 2009; the state ranks 46th nationwide. In fact, it turns out the recession might have a silver lining for some area homebuyers. Economist Art Woolf reported last week that, according to his calculations, housing in Vermont was more affordable last year than at any time since 2003. “This is good news,” he says, “for households with good credit who have saved up for a down payment.”

Many of those households seem to be getting the message — the starter-home market is pretty tight, especially in Chittenden County. Lauren Ober reports that the first-time homebuyer tax credit may be spurring sales in that category. On the other hand, Vermont’s luxury market isn’t moving very quickly, as Andy Bromage notes in his story about a $7.9 million island for sale off the coast of Charlotte.

Buying or selling a house might be easier if you work with a spirited real estate agent/bar owner/tattoo biz proprietor like Jessica Bridge. Lauren Ober describes why the 33-year-old Burlington agent has been so busy lately.

But real estate isn’t just about the bucks — Paula Routly contributes an essay about the emotional appeal of her new house . And Ken Picard talks with a real estate lawyer who explains what you can learn about people from the deeds to their houses. Of course, no real estate issue would be complete without tantalizing photos of houses — see the food section for for Suzanne Podhaizer’s tour of some of Vermont’s most decadent private kitchens.

Downsizing has its appeal, too, as Eva Sollberger’s new “Stuck in Vermont” video illustrates. She re-interviews Peter King, the “Tiny House” builder she first profiled in November 2008. That video has been viewed more than 73,000 times on YouTube, and sparked a flurry of interest in King’s gospel of simplicity and freedom from mortgage debt. Since then, he’s built 11 tiny houses, nine of them in Vermont. In this week’s video, King introduces a Monkton couple who are selling their 2400-square-foot home and moving into a 400-square-foot structure.

— Cathy Resmer

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About The Author

Lauren Ober

Lauren Ober

Lauren Ober was a Seven Days staff writer from 2009-2011.


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