Countdown to Tax Credit Expiration

This past week our listings saw an average of 3.2 showings each.   The countdown to the expiration of the home buyer tax credits is on.   Twenty one days remain.   I must admit that it is beginning to feel like 2006 all over again….lots of showings, multiple offers, the whole gamut.

Not only have showings picked up but many of them are  turning into offers.   The buyers that are out looking are more serious about purchasing than at any time I can remember over the past two years.   I know I’m not the only agent experiencing this as pending home sales are up in Mecklenburg County by 8% since last month alone.

On the front page of one newspaper I noticed today, there was a headline saying that home sales were surging.   But the gist of the story was that it is uncertain whether the boost in sales will continue after the tax credits expire at the end of this month.

My suspicion is that the expiration of the tax credits will result in a slow down of first time buyer sales.   An $8000 credit is a significant incentive in the price points that are most common with first time buyers.   However, the increase in sales has created some serious momentum in the market.   I believe that momentum will allow more of the higher priced sales to continue.

First, many buyers and sellers of higher priced homes don’t qualify for the tax credits because of the income limitations.   Second, the $6500 or $8000 credits may not be incentive enough as a percentage of price on a high end home to justify rushing a decision.   When you consider that simply waiting for a better deal might result in an even larger incentive, I think sales in the higher end markets will continue to improve.

Although my thoughts above might make rational sense, admittedly  they are merely predictions.   Closings related to the tax credits can occur anytime before June 30.   So based on sales volume, we won’t really know the impact until we see closing figures for July.   In May and June, we’ll be able to see if pending home sales hold steady, increase, or drop and that indicator will give us an indication of what’s to come.  

But between now and April 30, I’ll be out making sales.   Until then….

Leave a Reply

Your email address will not be published. Required fields are marked *