The tax credit for first time home buyers has expired. Is the market going to retract? Are we in store for another bubble burst? Or has the economy recovered enough that things can now return to "normal?"
Well…I am not an economist (not that economists seem to know anything the rest of us don't) and I am not about to make predictions for the overall economy. But if you'd like to hear an unsubstantiated but not totally groundless prediction of the housing market…I am happy to provide one. Let me gaze into my crystal ball…
1. The Spring is not over. Houses are still listing and houses are still selling. We saw a couple weeks of frantic last minute shopping that will appear as a spike in activity, but activity has not dropped off completely in the absence of government incentives. I am still getting showings and even sold a listing two days after the credit expired.
2. Things will slow down this summer…like they do every summer. The activity level might be lower than in an alternative universe where there had been no tax credit. In other words, some people that might have shopped this summer accelerated their plans in order to take advantage of the credit and have already purchased. But the market won't be dead. Some people just weren't ready to buy this Spring. Believe it or not, but there are other factors in people's lives other than a tax credit.
3. Same thing goes for the Fall. A seasonal up-tick in activity, but less than if the tax credit hadn't seduced people into buying this Spring.
4. Next year: It's the economy, stupid! If the economy is in full recovery mode, the market is going to be active and healthy.
5. I reserve the right to be wrong about any or all of the above.