By Starrla Cray
Staff Writer

With an $8,000 tax credit, falling prices, large selection, and low mortgage rates, 2009 might be the perfect time to start searching for that first home.

Newlyweds Aaron and Jody Schultz of Winsted couldn’t agree more.

“The prices are ridiculously low, even on homes that aren’t foreclosures,” Aaron Schultz said. “We’ve seen them $60 to $70 thousand under what they were a few years ago.”

The median price for an existing single-family home in the United States was $205,000 in December 2007, according to an index report from the National Association of Realtors. One year later, the price fell to $174,700.

The Schultzs have been considering homes ranging from $60,000 to $200,000. “We’re just looking for the right deal,” Aaron said.

Katie Gagnon, owner of Kg Realty in Howard Lake, said she is working with several first-time homebuyers. One of her clients paid only $136,000 for a house that had sold for $236,000 a few years ago. “That’s amazing,” Gagnon said. “It’s the perfect time to buy right now.”

Sellers may be willing to take less money than the advertised price, Schultz said. “If you see five or six houses you like, make lowball offers,” he recommended. “I don’t see anything bad about getting a house now. There are piles and piles of houses available, and every week, many of them drop in price.”

On top of the already slashed prices, an $8,000 tax credit passed in the economic stimulus recovery act makes housing even more affordable for some. First-time homebuyers (anyone who hasn’t owned a principal residence in the past three years) are eligible for the credit if they purchase a home on or after January 1 and before December 1, 2009. It doesn’t have to be paid back, and the IRS has a form that allows people to claim it on their 2008 taxes.

“There are many buyer incentives right now,” Gagnon said. For example, USDA Rural Development is offering a variety of loans and grants to help people purchase or repair a home in a rural area.

“Many buyers shy away from a purchase fearing they’ll need a significant down payment,” she said. But, some loans through the USDA Rural Housing and Community Development Program do not require a down payment at all.

“I suggest buyers meet with a professional to learn the details of these and other programs,” Gagnon said.

Low mortgage rates also make housing a “buyer’s market.” From December 2007 to December 2008, rates dropped from 6.31 percent down to 5.59 percent, reported the National Association of Realtors.

“The mortgage rates are very good,” Schultz said.

“It’s strange to say, but I think now is an exciting time to be a Realtor,” Gagnon said. “The current market poses amazing potential for home buyers and investors. It’s rewarding to watch a client capitalize on this opportunity while stimulating the economy through a home purchase.“

For people trying to sell a home, Gagnon said that although it’s hard to compete with foreclosure pricing, the loss should be recaptured on their next home purchase. Also, the stimulus package may provide options for restructuring or refinancing current home loans.

A short sale, when a bank allows the owner to sell a house for less than is owed on the mortgage, is another possibility for sellers. “Although they can be time-consuming and are not guaranteed, they are becoming more common and can prove to be a good option for all parties involved,” Gagnon said.

House prices are expected to stabilize by the end of 2009, according to a recent study from Moody’s Economy.com, an independent provider of economic data and analysis.

“Hopefully consumer confidence will increase soon so that more buyers will make the move,” Gagnon said.