This should be an interesting week in real estate.
A whirlwind of activity.
Well folks, this is it. The final week of the First Time Home Buyer Tax Credit (unless you qualify as a service member of the military with “official extended duty”). We’ve been talking about it for what seems like forever, but the time has rushed by and now it’s here. The end of a tax credit that has stirred feelings and opinions from both sides of the fence, for and against.
How did the tax credit perform? Was it the right thing to do? Did it help or hurt our economy and the beleaguered housing markets? What is the final outcome of the First Time Home Buyer Tax Credit?
A Realtor® and his thoughts.
I haven’t been the biggest advocate for the First Time Home Buyer Tax Credit. Although I’ve encouraged my clients to take advantage of it if they are buying a home and I’ve blogged many times about the tax credit, I wasn’t in favor of the extension last year. I fear that we have tried to artificially inflate the real estate market with a flood of new buyers – some who were not ready to buy, but couldn’t give up a chance at $8,000. I don’t argue that it helped many people make their decision to get back into the housing market, but what if we pushed them too quickly? What if those same people weren’t exactly prepared to buy a home? Many real estate agents I speak with worry that we’ve also just changed the flow of buyers with the deadline of the tax credit. Instead of buying this summer, they scrambled through April to buy a home, so what happens to home sales this summer? Will there still be qualified buyers out there?
Many of the questions I see and ask about the effects of the tax credit, both its existence and expiration, won’t have an immediate answer. Only time will tell if we’ve placed too great a burden of the U.S. economy (for every $8,000 check written to a new home buyer, we have $8,000 less to spend on the services and budgets of the country), although most agree that it will cost us in the future. The spirit of the original $7,500 tax credit had some control over the budget issue, as it was more or less a repayable loan from the government, but it was replaced by the current tax credit, which does not have to be paid back (unless you sell the home in the first three years).
I haven’t seen that great of an effect from the tax credit personally. Most of my clients have stated they want to take advantage of it, but if they can’t find the house before the cut off, they’ll continue looking and buy when they’re ready. I like this attitude towards the tax credit. Buying a home just because of the carrot dangling in front of you, may not be the best move. It is only a “great time to buy” when it’s a great time to buy for you. There’s more to buying a house than wondering what freebies you’ll get with it – this isn’t a Christmas sale at Kohl’s afterall.
Lucky for me, I am a Realtor® in San Antonio. Some of my friends have really had to struggle in their markets and completely recalculate how they do business in their area because of the amount of foreclosures and short sales. Although we have plenty of both, our numbers are nowhere near the numbers in places like Florida, Arizona, Nevada, and California. Overall, I think San Antonio will keep plugging away, much like we always do. We did get swept up somewhat in the housing frenzy, but based on the number of owners I see selling today that are from places such as California, I think investors were the prime buyers during the run up to the slump.
The tax credit has not completely leveled out theSan Antonio housing market either. We are still solidly in a buyer’s market and it will take some more time before we begin to see a balance or even a shift into a seller’s market. Is the tax credit to be thanked for the shift in inventory? I definitely think it deserves some credit, but I’m not sure how much. Numbers on the tax credit have been widely debated, so until I see some hard, fast numbers, I’ll reserve full judgment. Of course, it did help somewhat – did it have the desired effect? I don’t think so.
The goal of the tax credit was to perform something just shy of a miracle. Although it helped some people hop back into the housing market, I think there are still plenty who are waiting, hoping that once again Uncle Sam will sweeten the deal with a few more incentives or dollars. Just looking through the amount of people that google their way to a post such as, “Question: Will the tax credit be extended to 2011?,” gives me all the evidence I need to think that there are those out there thinking “I can wait until the next round.”
I truly think the government is putting this one to bed for quite some time. I’m sure in my lifetime, it will rear it’s head again during some crisis or political election year, but for now I believe this is the last we’ll be seeing of the First Time Home Buyer Tax Credit. I wish it farewell and hope all of you that wanted to take advantage of it had your chance to. Those that didn’t, well now you can get back to looking for a home without all the distractions of real estate blogs like this talking about the tax credit.
photo courtesy of themonnie
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Comments
Your mention of the tax credit and it redirecting funds from the budget makes me realize that we should be watching the turmoil in Greece very closely. No to see how the EU reacts to Greece’s financial difficulties but to learn what to expect from our population when the same austerity measures fall on us. Anyone that thinks that our economy will be able to suppport, not just Social Security and Medicaid going forward, but the unbelievable lush retirement packages that federal and statee workers have. My age places me smack in the middle of the baby boom generation and I know that Social Security will not be there for me. Now will Medicaid. Face the facts, John Q. Public, we’ll all be working as long as we are physically able to.
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