First Time Buyer Countdown

This past week we saw traffic increase slightly to about 1.7 showings per listing on average.   Many of the showings were on homes that are likely candidates for first time buyers.   I’m not surprised and expecting to see this surge continue for another few weeks.

There is no uncertainty about whether or not the  first time buyer tax credit has made an impact on the recovering real estate market.   The tax credit has been a great success.   Consider the following data for the Mecklenburg county real estate market over the past six months:

– 3305 homes have sold for for under $250,000 while only 1240 have sold over that amount

– There are 5026 homes  currently  on the market under $250,000 and 3726 over that amount

From these figures we find that inventory currently stands at 9 months for homes under $250,000 and 18 months for those over that amount.   Remember that the months of inventory represents the amount of time it would take for the current housing supply to sell out based on the past rate of sales.   Six months of supply is considered balance while anything over is considered a buyers market.   Either way it is a buyers market, but those with lower priced homes are certainly having more luck than the rest.

Clearly the first time buyer credit has directly impacted sales on homes under $250,000.   However, we also have to consider the “trickle up effect”.   When a buyer purchases a home under $250,000, there is a fair chance that the seller is going to be trading up.   This trade up is likely to have induced many of the recent sales over $250,000.   Without the tax credit, many of the sales in both price brackets simply would not have happened.

The credit expires November 30th of this year and buyers must close by this date to qualify.   Keep in mind that many lenders require 30-45 days to process a loan.   This means that a buyer really needs to be “under contract” within the next week or two if they are to take advantage of this credit.   This limited window explains the recent jump in showing activity as buyers scramble to write contracts that will close before the expiration.   I’ll be monitoring contract activity to see how much is crammed in over these last few critical week.   Stay tuned for your update.

In the meantime, if you would like to see the tax credit extended you can always write your congressmen.   I have already written to mine.

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