Expiration of Tax Credit Dampens -- but Doesn't Halt -- House-Hunting in Illinois

SULLIVAN, Ill. -- The recent expiration of the home-buyer tax credit removed an $8,000 incentive from the table for first-time home-buyers and $6,500 for repeat buyers like me.

Following the close of the tax credit, new-home purchases tanked 18.3 percent in May compared to a year earlier, according to a U.S. Commerce Department report. National Association of Realtors figures showed existing-home purchases down 2.2 percent.

But tax credit or not, my fiancé and I are still house-hunting here in central Illinois.

We are in the final stages of demolition for a home addition. The new addition will eat into valuable outdoor living space, so we decided we could add on and rent the house. Our rental profits will go toward the ranch-style home of my fiancé's dreams. Our basic requirements? Three bedrooms and at least 1,200 square feet to accommodate family growth. We are looking to purchase a home for $70,000 to $90,000.

Here's a look at three properties we've seen and how the economy is shaping our decision:

Our search began with a 2007 modular home (1,680 sq. ft.) on South Maddox that listed for $94,900. The home does feature a desirable open floor plan, central air, three bedrooms, large master closet, two baths and a half-acre lot. It also happens to not have a crawlspace, wood floors and the flimsy feel of a mobile home. A comparable modular home with an attached three-car garage and fenced yard recently sold for less than $50,000.

Comparable in price, at $105,000, is a brick home at 8 Eastview Place. This three-bedroom, 1,452-square-foot ranch is an older home, built in 1963. It has the benefit of an excellent neighborhood, better curb appeal and a crawl space. Inexpensive drywalling would update the interior and put it on par with the freshness of the first modular home. The house could have been within our budget with the home-buyer tax credit, but it's not a feasible option now.

Located on North Graham Street is a $86,500 home with a landscaped outdoor patio I have admired for years. The 1961 ranch is only 1,144 square feet, but it boasts two workshop/office buildings. The only caveat I have with the outside is the lack of room for a large pool and flower and vegetable gardens. The three-bedroom home would require an expensive kitchen update and additional bathroom installation.

The Illinois Association of Realtors forecasts that state real estate sales will remain positive until August, when it predicts negative sales of four to six percent. Housing prices are not expected to recover rapidly. This is not unexpected, as Illinois' May unemployment rate was at 10.8 percent. The forecast makes us feel more comfortable and responsible in waiting to see what our purchasing dollars are really worth.