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.
What are the specifics? Well you'll be able to use the $8000 on contracts through April with some expanded income qualifications. And you'll be able to qualify for up to $6500 even if you're NOT a first-time buyer. You will have to have owned your current home for 5 years. This leaves some people out who could really use the $6500, but hopefully it will lead to better inventory for all the first-time buyers.
Check out this news brief from the National Association of Realtors for a break down of changes from the old bill: http://www.mnrealtor.com/AM/CM/ContentDisplay.cfm?ContentFileID=2950&MicrositeID=0&FusePreview=Yes
Well if you have lots of money and job security, go on a shopping spree! And try to by local products at local shops.
But if you're just doing okay and have a stable home environment, adopt a pet. They are the silent victims of the foreclosure crisis. Many families have had to give up their dogs and cats in order to find a new place to live. There have even been stories of families visiting their beloved pets at the shelter until they were adopted.
If you are looking for a animal companion, please consider adopting a pet from a humane society or other shelter instead of from a breeder.
Good question. Congress has been passing laws faster than the industry knows what to do with them. The current law, as was passed last year, gives a $7500 credit on your tax return for qualified first-time buyers who purchase a home between April 9, 2008 and July 1, 2009. Except it isn't a credit. It's a zero interest loan that must be repaid on your future taxes over the next 15 years.
As you can imagine, this did little to stimulate the housing market. It doesn't increase your ability to purchase a home. It just makes expenses easier to handle once you're there…eventually…when you get a refund…that you pay back.
The new stimulus plan that passed the house on Wednesday turns that credit into a…CREDIT! If the bill becomes law, that $7500 would become a straight-forward credit on your 2009 returns. It would retroactively include purchases made since January 1, 2009 and extend through either June or August (depending on the bill).
Will this simply be a windfall for the qualified first-time buyers who were going to buy anyway? Or will this be enough incentive to convince someone on the fence to buy? It still won't give you $7500 to use towards your down payment. But knowing it's there in 2010 may just be the assurance you need, that you can afford to buy in this well priced market.