Stephanie Klein-Davis | The Roanoke Times

Roanoke real estate agent Donnie Marie Harris with Long & Foster shows a home Saturday to Ryan Patterson and Lauren Thomas, who say the new federal tax credit is an added incentive to buy a house this year.

Ryan Patterson and Lauren Thomas hope to buy their first home this year, taking advantage not only of the low interest rates but also the new $8,000 federal tax credit. Patterson said he would likely use the credit to reinvest in whatever property they buy.

Patterson and Thomas explore the back yard and deck of a house on Beverly Boulevard Southwest in Roanoke with Harris. Harris said she typically works with one or two potential buyers, but now she is juggling several couples.

Typically, Donna Marie Harris works with one or two potential home buyers at a time.

Now, the Roanoke Valley real estate agent is juggling seven couples, and the majority are hunting for their first home.

It's a rare situation for Harris and other agents nationwide. The market for home sales has lost its spark, leaving real estate agents locally and nationwide to find work elsewhere until sales return to a predictable pace.

But an $8,000 federal tax credit, available to people who are buying their first home this year, coupled with continued low interest rates, is fueling what may be the start of a sales upswing. Real estate agents say the credit, signed into law last month, has the potential to lift an ailing real estate market, which saw home sales in the Roanoke Valley sink 20 percent in 2008.

Agents in the Roanoke and New River valleys say they are fielding calls, showing off property and learning the particulars of the law.

Also, using the credit to spur sales, a Roanoke County house builder is offering to match the $8,000 credit if a qualifying first-time home buyer purchases one of the builder's new houses in Roanoke County and Salem.

The National Association of Realtors predicts that the tax credit will encourage home buyers to purchase an additional 300,000 homes this year, a much-needed boost for real estate sales nationwide. A $7,500 credit offered last year likely spurred some sales, but it required homeowners to pay back the funds, unlike the 2009 credit.

This year, "it's a true tax credit," said Mary Trupo, a spokeswoman for the Realtors association. "We really do feel like we're going to see results."

Even so, getting the word out is key to sales, and local real estate firms are training sales agents on the terms of the credit and preparing question-and-answer fliers for potential buyers.

Still, some experts caution that buyers should be wary of the credit's requirements and to not invest in a house that they cannot afford.

Fearing that much confusion about the credit is swirling, Amy Hudson, owner and broker at RE/MAX 8 in Blacksburg, has been busy copying fliers for her agents to distribute to clients to explain what the tax credit means and who qualifies.

The funds are available to first-time home buyers or someone who has not owned a home for at least three years. They must purchase a home by Dec. 1, and their adjusted gross income cannot exceed $150,000 for a joint tax filing or $75,000 for an individual.

The legislation is part of the American Recovery and Reinvestment Act of 2009. Buyers also can receive the $8,000 this year when they file their taxes, if they bought a home in early 2009.

News of the federal stimulus has resulted in increased phone calls at Hudson's firm, where "it's been very busy in what I call the affordable housing, under $200,000 range," she said on a recent afternoon.

"They want to take advantage of that $8,000 credit," she said.

But in Blacksburg and perhaps in other parts of the region, it's still early for some interested buyers to seal the deal on a home purchase.

Because many first-time home buyers are renters, some leases do not end until the summer, Hudson said. She expects people to land a housing contract in March or April, traditionally the busiest time of the year for home sales.

They likely will wait to close on the purchase in June before ending a lease.

Even so, "The looking has started, and the value is there," she said.

Ryan Patterson and Lauren Thomas already have begun the hunt for their first house, and they plan to receive the $8,000 credit when filing taxes next year.

Although they have a number of reasons for making their first home purchase this year, including low interest rates, the tax credit is a welcome incentive.

"It's a nice thing that's out there," said Patterson, who is 27 and works full time. He said he'll likely use the government funds to invest in the property in some way.

On Saturday, the couple studied the finished basement and hardwood floors of a three-bedroom Cape Cod brick home on Fairway Drive in Roanoke, with a listing price of $189,950. Ideally, they're hoping to land a home with at least two bedrooms that's priced between $150,000 and $200,000.

Cooper Homes, a local home builder, hopes to take advantage of the funding boost by adding some extra incentives.

If a home buyer qualifies for the federal credit and purchases one of Cooper Homes' houses at new subdivisions in Roanoke County and Salem, the builder plans to match the $8,000 credit.

And if someone buys one of the homes who does not qualify for the credit, the builder says it will give them $8,000.

Although new home sales are not necessarily stagnant for Cooper Homes, the company wants to boost business, particularly as the busy spring selling season revs up. The company also will do buyers' taxes for free.

The matching incentive, plus the offer of the credit, "gives them [home buyers] some reason to get off the fence," said Al Cooper, president and chief executive officer of Cooper Homes.

The tax credit isn't only a wake-up call for buyers. It could be beneficial for sellers who are waiting for the right time to sell their house priced in the $150,000 to $200,000 range. These are the kinds of properties that appeal to people looking for their first home, real estate agents say.

"Those people need to be getting their houses ready," Hudson said. "First-time home buyers don't have time and extra money to do touch ups on a house. They want it walk-in perfect."

Still, people who want to take advantage of this credit should think carefully before they make a hurried home purchase.

It's not the best move if people expect that they will have to sell their home in three years. The law requires that people keep the home for at least three years to keep the $8,000 or they must repay the credit.

Also, buyers should be wary of allowing the credit to entice them to buy a house that they cannot afford, said Ronald Wilcox, professor of business administration at Darden School of Business at the University of Virginia.

It could result in the same situation that already has led the country's financial institutions down the wrong path.

Plus, "If housing prices decline further, that could easily eat up any advantage that you could get from that tax credit," Wilcox said.