The first time home buyers that took advantage of the $8000 tax credit have either already closed on the home of their choice or the paperwork is done and the closing date set for no later than November 30th. The tax credit may be extended until April 2010.
The tax incentive may also be modified to include current home owners who will receive a $6500 tax credit of they have lived in their current home at least 5 out of the last 8 years. There are income limits and well when if it gets passed we will have to read the fine print.
The tax credit did give home sales a boost for a couple of months but I don't think we can create first time home buyers with a tax credit. I think the people who took advantage of it were people who were ready to buy homes this year or maybe next year, or possibly the year after. We just helped them buy sooner rather than later.
Extending and adding to the tax incentive would give home sales a boost. lower home prices and great interest rates are also an incentive but apparently not enough of one.
The high unemployment rate is eliminating some of the move up buyers from the already small pool of move up buyers. Many of them moved up already during the recent housing boom. They bought starter homes and then three to five years later sold them for a profit and bought bigger houses. People with out jobs don't buy homes, they sometimes go into foreclosure. Having a job is a huge incentive to spend money because people with jobs have money to spend. Jobs also give people an incentive to get out of bed each morning.
It will be interesting to see if people will be able to take advantage of an extended and expanded tax incentive, if there is one. I will predict that it won't have much of an impact on the local housing market and when it runs out things will pretty much be the same as they are now. Sluggish home sales with little or no appreciation in home values for the next several years.
The people that did buy houses this year helped the economy. I know that I have work because of it and so do the title companies, inspectors, photographers and all of the support services we use in the real estate industry. I guess that is a good thing.
