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.
First, sorry Blog. I moved this summer into a wonderful large home that needs lots of work. So I've been distracted with all that work. Plus I was crazy busy until the first weeks of November.
Yes last fall was crazy. Buyers were motivated to take advantage of the first time home buyer tax credit, and I was involved in multiple offers on a weekly basis. This all stopped when the government passed an extension for the credit. The sense of urgency went away and everyone seemed to take a breather for the holidays.
Second, the holidays are over and the market is back up and running. New listings are coming on at a fast pace and showings are up too. My buyer clients had no choice but to take the holidays off as there were no new homes to see. But now they are eager and ready to see all the new listings as they hit the market.
If you are considering selling in the near future, you might want to make that near future nearer. Buyers are motivated to find a place before April 30th to claim their tax credit. And if you've owned for more than 5 years, you can get your own tax credit if you sell and buy and new place. $6500! Not too shabby! If you are asking, "Should I sell now or later?" The answer is: NOW!
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