Late last year, the homebuyer tax credit was extended, incorporating existing homebuyers for the first time in an effort to further strengthen the housing market.

But the addition of existing homebuyers to the pool of taxpayers eligible for the credit appears to have garnered scant attention. Agents across the state report many existing homeowners who are looking for a new home are ignorant of their potential eligibility for the credit – and many of those that are aware of it don’t seem all that motivated to purchase before the deadline.

“So far there has not been the kick to the [extended] tax credit as the original for the first-time buyers,” Lawrence Yun, chief economist for the National Association of Realtors, told Banker & Tradesman.

A tax credit for first-time homebuyers was first launched in 2008 under the Bush administration. At the beginning of 2009, the credit was revised and extended as part of the stimulus bill, with first-time homebuyers eligible for as much as $8,000. Last fall, the credit was extended again, until April 30 of this year, this time including existing homebuyers. Homeowners who had owned a home for at least five consecutive years of the previous eight, and were looking to purchase another primary residence, became eligible for up to $6,500.

Lackluster Reception

The excitement generated by the first-time credit, however, does not appear to have moved up the chain.

“The people that I’m dealing with, I don’t think it was the motivating factor, whereas the $8,000 credit was definitely a motivating factor,” says Marybeth Mills Muldowney, president of the Plymouth and South Shore Association of Realtors.

Year-over-year sales are higher in recent months, suggesting that the stimulus is helping somewhat. Last month, Massachusetts homebuyers snapped up 4,188 single-family homes and condos, up 11.9 percent from February 2009, according to data from The Warren Group, publisher of Banker & Tradesman. Total sales in January were up 15.8 percent compared to January 2009, while in December total sales were up 20.5 percent year-over-year.

But, according to Yun, “so far [it] has not been like [the number of sales] in October and November,” when sales may have been driven even more by what was then an impending expiration of the homebuyer credit. According to The Warren Group, total home sales in the Bay State came in at 5,976 in November, up a whopping 57.5 percent from November of 2008. Yun estimates that when it is all said and done, about 2.2 million first-time and existing homebuyers nationwide will take advantage of the extended tax credits. But, “many will have bought even without the tax credit,” he says.

The few move-up or existing buyers out there who’ve been inspired to purchase now to take advantage of the credit seem to be those already in the market. Chad Wegner of Sudbury is one.

Wegner and his family had been searching for a home for some time, after moving to the area from the Midwest nearly two years ago. They had made other offers which hadn’t worked out, and were motivated to close on their current home in order to take advantage of the credit.

“It’s really good to try and take advantage of it,” Wegner said. “The tax credit was certainly a great help, and it did influence our buying decision, or at least the timing of it. But I certainly wouldn’t do something because of it.”

Back To Renting

Some blamed a lack of publicity for ignorance of the extended credit in the marketplace.

“I’ve been telling people about it, but nobody’s been aware of it,” says Melissa Schers, a Keller Williams agent based in Boston. “I think the word has to get out to these people that we’re encouraging them to move.”

Income caps may play a role, too. According to the IRS, for homes bought after Nov. 6 (when the new law went into effect), single buyers earning up to $125,000 per year are eligible for the full first-time and existing credits, with partial credits available up to $145,000. Joint filers earning up to $225,000 are eligible for the full credits, with phased credits available up to $245,000.

Buyers who already own a home and are looking to move to a larger or more upscale property are more likely to fall into these higher-income brackets than first-time buyers, sources said.

“I’ve definitely mentioned it to people and they’ve been interested,” says Kathleen Alexander, another Boston Keller Williams agent, based in a different office than Schers. “[But in the city] at least, some of them don’t meet the income requirements.”

Some of Alexander’s existing clients who were in the process of selling their current homes said they were planning to rent instead of buy, a pattern David Shortsleeve, a Coldwell Banker sales manager in Worcester, has seen in his area, too.

“We thought that [the tax credit] would drive the move-up buyer, but it has not,” he says.

Though his office has been seeing a lot of interest from first-time homebuyers, it hasn’t translated into a surge in interest from existing homeowners.

“In that range, $6,500 is just not enough to have them buy a second home,” Shortsleeve said.