On The House: The state of homes from tax-break era

It has been awhile since I mentioned the tax-credit programs designed to jump-start home sales during the real estate downturn.

They turned out to be a temporary fix and likely delayed the start of recovery by two years. Even worse, there seemed to be more than the average share of fraudulent claims associated with the three programs, the first of which began in 2008. The last ended June 30, 2010.

The federal tax credit worked until it went away, cost us all billions, and did little for the home-building industry.

In the case of the tax break that expired in June 2010, people changed their plans so they could qualify and buy before the deadline, shifting sales to the first four months of 2010 that would have occurred in the ensuing months and even the first half of 2011.

Sales volume, even with millions of distressed properties going really cheap, slowed the decline in home values for a time, but then they resumed their fall.

"We misjudged the impact of the . . . tax credits," economist Patrick Newport, of IHS Global Insight Inc., told me at the time. "We expected the credits to both shift demand and increase sales and [housing] starts. It appears that the tax credits mostly shifted activity."

After the June 30 expiration date, the market was dead for a year, and didn't start to revive until 2012.

So why am I mentioning the tax credits at all?

Zillow issued a report recently about how people had fared buying homes over the last several years.

It turns out that timing made a big difference, the report said, adding that "millions of homeowners [who] took advantage of home-buyer tax breaks to buy homes in 2009 and 2010 would have been better off investing their money almost anywhere else."

Before you start kicking yourself, consider that the source is Zillow, which generates about as many complaints to me from area real estate agents as do HGTV makeover ideas.

A Philadelphia-area buyer who purchased the median-priced home in 2009 would have netted an average of $87,840 if he or she had rented instead and invested the savings in the stock market, Zillow said. Someone who decided to buy instead of rent in 2012, however, is closer to breaking even on the home today: down only $18,291 compared with renting and investing.

I've been trying to recall the names of some of the buyers I spoke to during the tax-credit years, to see whether Zillow's findings might make them regret their choices. I remembered one, though I won't identify her because I have not been able to contact her to obtain her permission.

When I interviewed several buyers as the deadline for the final tax break approached in June 2010, this woman, who had been transferred to Philadelphia and was unable to sell her house in Pittsburgh, said her "$6,500 rebate made all the difference in the world" in her ability to buy here.

I assume that she, and many other tax-credit beneficiaries who wanted to buy a house as a place to live, and not simply as an investment, have no regrets.

Zillow's chief economist, Stan Humphries, always a voice of reason when commenting on the unending supply of surveys by the search engine, remains true to form.

"There are any number of factors to consider when purchasing a home, only one of which is the potential for financial gain," Humphries said. "Potential buyers should always place their personal needs and their family's needs first.

"Just because the math might say to buy or rent in a given area, personal preferences and situations vary greatly," he said, "and there is no one answer that is right for everybody."

aheavens@phillynews.com

215-854-2472 @alheavens