With less than two months remaining to enter into a contract to purchase a home and qualify for possible tax credits, the level of buyer activity will elevate to frenzy in the immediate days ahead.
The last minute buyers will compete for what remains in an artificially diminished inventory, and many will be force to “settle” for a property that does not meet all of their expectations.
But what will happen in the days after April 30, 2010? Many predict that the market will grind to a halt because buyers have come to depend on tax credits as part of the value proposition, and that once eliminated, there will be little or no reason to purchase real property.
Nothing could be farther from the truth. Real estate has never been more affordable, and even though there may not be an immediate cash benefit via a tax credit, the opportunity to purchase value-priced real estate will continue to encourage buyers across the board to continue to invest in piece of America.
And the inventory of homes available for purchase will become normalized as buyers are motivated by the true market forces of supply and demand rather than a dangling carrot on a string.
So while there may be a few weeks of lower activity as the market stabilizes, eventually we will return to a market driven by a broader spectrum of buyers that are drawn to a better selection of properties at historically low prices.
Which should lead to a long, hot summer of real estate sales!
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Hey Richard! This is the biggest mystery for us agents right now. On the bright side, I am dealing with many clients who could care less about the tax credit and are moving at their own pace.
I think you are right. I've been working with some people who like the idea of the tax credit but who are not driven by it.
Richard, we too are wondering about what will happen. It will be an interesting summer.
Good morning Richard,
I agree there is life after tax credits with sane, well educated buyers that will make decisions based on what is right for them and not incentives.
RIchard, I agree that real estate will continue after April 30. I've talk to a couple of people waiting until it's expired to purchase because the work for the government and don't want anything to do with it.
Richard - The end of the tax credit has been akin to crying wolf...consumers don't believe it. Let the new reality show begin
Hi Richard, It's going to be an interesting Summer for sure! I also have a few buyers that are not driven to buy due to the tax credit. If they find something, then great. If not, the search will continue. And I'm more than happy to continue with them.
Richard,
True, folks still need to move somewhere. I do expect to see a short term slowdown and then the "normalizing" that you mentioned.
In the average price point I sell, the incentive is not the largest driving force, the right house and timing are more important.
All the best, Michelle
Richard.....we don't know what lies ahead, but what we do know is that we need to work diligently RIGHT NOW and do as much business as possible to prepare for the worst....if the worst never happens, we made a "score"....if the market tanks, we will survive that period because we worked diligently, RIGHT NOW.
Richard - I think the spring market will give us an indication of what to expect for the remainder of the year. Hopefully, we'll have some stabilization.
Richard the tax credit is a great incentive for buying, but I don't think it is a deal breaker for someone looking to buy a home. Time will tell.
Richard the inventory is certainly being depleted of homes by first time buyers. But to keep it moving some of the move-up buyers need to get into the system also, and we don't see many of those around our area.
Obviously, we Realtors are a resilient group. No matter how the market reacts to the lack of special incentives, we'll "pick up the pieces" and continue doing our best to sing the praises of homeownership!
I am not sure tax credits have been the major influencer of buy decisions but I could be wrong. BTW, you should start a new blog with just your pictures every day. I would tune in!
Jennifer...
Unfortunately, 90% of our buyers seek a tax credit, but I think we'll be OK! Thanks for the comment.
Stacey-Ann...
It's better to get the house you want that a tax credit on a house you don't like. Thanks, my friend!
Gabe...
I think that we are at a turning point. Thanks, as always!
A lot of our buyers were purchasing anyway and the credit was just a bonus. I am not sure how many were actually motivated to buy a home because of the credit.
While the tax credits have definitely had a positive impact on spurring on the market, people will still be buying and selling homes once the credit expires. I don't anticipate the market to come to a stand still because the tax credit runs out.
I agree that this is the time to buy. If buyers are looking to take advantage of these credits they should kick into high gear. However, for those who don't, there are still plenty of homes at good prices still available.
This, indeed, has been a thought of mine as well. We have a LOT of inventory here in our local market. Buyers, not out as I thought. We'll have to take a wait and see on this one. But, I too wonder.
My buyers aren't even talking about the tax credit any longer ... it's like it's old news! Now everyone is talking about "phantom inventory". When will the banks release their foreclosures?
Richard I blogged about this last week. We are artificially pulling demand forward and what will fill the vacuum after April 30th?
Like Barbara stated above, I'm working my tail off to get as many clients as I can over the next month or so just in case the market does draw to a mere trickle. We will have to start planning NOW for that time. (And start blogging now for that market).
Hi Richard, I'll be glad when this whole tax credit thing is finally over and the market can seek a natural level. I've had it with government creating a problem and then trying to throw our money at it.
Richard, As a vacation home seller, the tax credits have done nothing for me, when they are eliminated it will actually level the playing field a bit. My buyers can think about nicer second homes with an eye towards retirement...rather than "we have to buy a primary" with the credits being offered.
Richard,
There will be folks that will be buying and selling real estate after the tax credit comes to an end. It will also give us a good picture of what the market will be like for the remainder of the year.
I agree with you Richard as I have not had many buyers mentioning the tax credits recently as they just want a home of their own.
Great part is they are buying homes they can AFFORD,
Richard, I have a little nagging voice in my head telling me to save my commissions just in case... but I agree. The market won't be as crazy as it is now, but it will continue because of the great prices and great interest rates. Great post. Miss you! And... is that a Cameron sighting??? Hi Cam!!!
I hope all these tas credits go away soon. we need to get things back on a normal basis. A major part of my business is in bare land and the incentives do nothing for my buyers or sellers.
I am curious to see just how the public will react to the expiration of the tax credit myself. One thing about, with or without the credit, you can still get a great deal on a new home.