I have a lot of clients that are scrambling to get under contract by April 30th to capitalize on the tax credits that will cease to exist after that date.
The problem is, they are not alone. Many other buyers are competing for the few remaining properties. One HUD home in our area garnered ninety bids, with the winning bid nearly $20,000 OVER the list price.
So the question is: “How much would you pay to save $8K?”
The fact of the matter is that after April 30th there will be a better selection of affordable homes that will most likely sell for much, much less! The sudden frenzy of demand will be replaced with calm and deliberate negotiating.
I have suggested to my cash buyers that they wait, because after the expiration of the credits, cash will once again be king and a great bargaining device.
I am ready for the end of deadlines and the artificial demand that result from them. I want to return to normalcy.
And let the market stabilize on its own!
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Hi Richard, I think that is what's needed. Let the market stabilize on it's own. It's going to be interesting to see what happens with the latter part of this year in real estate!
I hope the market will stabilize. Investors may find good deals after the deadline first time buyers may find it more appealing to buy a house now because they will use their savings for down payment and closing costs and will receive $8000 that they can have in their bank account.
Richard....I think by the end of this year we will see many real estate agents eliminate themselves from the business....this market will take a very long time to stabilize....many years...and unless agents are ready to handle that time span of reduced or no income, not only will the housing market stabilize but there will also be a very noticeable adjustment in the brokerage community....just my opinion!!! I have a habit of getting myself into deep doodoo when I express it lately!!
Richard...isn't there a saying about tripping over the quarter to pick up the nickel? I a gree with this post so much!!! I know a lot think the market will "tank" with out the tax credit....but I think that it will continue on...and a lot more cash buyers will be coming around and picking up crazy deals!!!
Jackie...
I think that it will be better. I really do. Thanks.
Gita...
But the interest in the savings account is less than one percent, while they are paying up to 5 on the additional money borrowed for the inflated price. It's a numbers game. Thanks so much for joining the conversation!
Barbara...
I am looking forward to a more methodical approach than driving all over town like maniacs before someone else makes the offer! Thanks so much.
Richard, I agree. But the current mad scramble to be under contract by April 30th is sought mostly by buyers who were going to purchase anyway, at least that's what I've noticed.
Richard, I agree. But the current mad scramble to be under contract by April 30th is sought mostly by buyers who were going to purchase anyway, at least that's what I've noticed.
Richard, I would imagine there will be a buying frenzy this coming week. Hopefully, everything will get back to normal after next and all you will have to worry about is getting all those contracts to settlement before June 30th.
Richard, interesting view. Here in our little corner, our inventory is down considerably and prices have started to rise on the lower end at least. (See my market reports). I'm mot sure what the after effects of the end of the tax credit will be. Could go either way, around here at least.
Richard what a great post---I agree with your common sense approach to 'not buy just to get the 8k credit', on the other hand, I am deeply concerned about the market after it expires--I am not sure if it is an artificial demand situation---it is an incentive-plain and simple. Not unlike coop commission bonus' or closing costs paid by the seller etc. This market (in my opinion) will not stabilize for many years to come (and believe me...I am hoping I am wrong) we need some incentives to help get some of this inventory off the table---in any way we can.
The buyers are also looking at the current low interest rates and thinking that very soon they will shoot up.
Richard: I have a buyer I'm working with now that I expect will not be able to get under contract before the end of the month. But like you, I don't see this as a bad thing. I think he'll have a much easier go of it when this tax credit is over.
Richard my question is will home prices decline about $8,000 when the credit ends next week?
Great post, Richard, I think that the tax credit has created demand in a specific price range that is within the first time homebuyer's range...I hope to see an increase in the price ranges above when it ends!
This is a great way to look at it Richard. I like your optimism following the end of the tax credit.
Richard - I wonder why logic does not always prevail...oh, yeah...its that thing called emotion!
Richard, I like where you are going with this, I think we will some "calming" to the market, lets just hope it's not too calm...
I have to agree that the "post April 30th" market could see even more great deals "to be had" for buyers in many markets. Competition will be significant and pricing -pressure will result in some outstanding offerings. Bring it on!!!
I have taken the same approach with all buyers. We look at what they are spending and make a decision if the price justifies the rebate.
I've been telling my buyers the same thing. Why get in a war to raise a price when more than likely after April 30th there could be a market correction that could lower the prices of homes by $8,000 or more. So why pay more to get the $8,000 from the government.
Richard, we may see a bit of a lull but it would be right so as to let the dust from this manufactured rush go away. I must admit that I have taken advantage of the rebate, without any guilt. But through out the rush I also continued to send out my letters and notes and run my business the way I believe I need to to survive. You and Lenn are on a similar path today.
Hi Richard,
Yes you have a valid point as we are coming into the home stretch of the $8K tax credit. I don't expect to see the home prices dip down here but still steady buying and selling.
Just had that happen, buyer paid $20K more against my recommendation. Oh well ...