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Take Advantage of the Tax Credit, ending 4/30!

April 29th, 2010

By now, many savvy first time home buyers have taken advantage of the $8,000 tax credit that ends Friday, April 30th. The program was designed to stimulate the economy and revive the housing market and it appears to have worked. According to the National Association of Realtors, existing home sales rose 6.8 percent to a seasonally adjusted annual rate of 5.35 million units in March from 5.01 million in February, and are 16.1 percent above the 4.61 million-unit level in March 2009. Lawrence Yun, NAR chief economist, said it is encouraging to see a broad home sales recovery in nearly every part of the country, with two important underlying trends. “Sales have been above year-ago levels for nine straight months, and inventory has trended down from year-ago levels for 20 months running,” he said. “The home buyer tax credit has been a resounding success as these underlying trends point to a broad stabilization in home prices. This is preserving perhaps $1 trillion in largely middle class housing wealth that may have been wiped out without the housing stimulus measure.”

The question now is what will happen when the credit goes away? Will home sales falter or remain steady? Some economists predictthat home prices will continue to drop in some areas due to unemployment levels of nearly 10 percent. Bad news to those who are trying to sell but this creates great value for those who are still looking to purchase a home. Although no one can truly predict the ebbs and flows in the real estate market, there are contributing factors which help experts forecast. For one, real estate is seasonal and spring looks favorably upon the market. It is also heartening that the Federal Reserve is cautiously optimistic that inflation will not increase for eighteen months due to the real estate upswing. Critics were worried that mortgage

rates would increase but economics 101 tells us when supply meets demand in a competitive market, economic equilibrium occurs which has resulted in steady rates.
The bottom line is we are far from the out of the water and many areas have yet to see economic improvement. But increasing real estate sales leads to improved economic conditions and this is the perfect time for buyers and investors to get in at the bottom or near bottom, and buying or investing will keep the economy improving.


One Response to “Take Advantage of the Tax Credit, ending 4/30!”

  1. Beth, last month we were very busy with first time homebuyers. This month I have seen a lot of Jumbo buyers (loans> $417,000) as Jumbo rates have plummeted from 6.5% one month ago to 5.625%. Jumbo 5/1 Arms are in the 4′s. For non-jumbo buyers, rates are in the 4′s for a 30 yr fixed and that is keeping demand UP. Finally, with so many short sales and REO properties being sold in need of fix up, the FHA 203k rehab loan is in vogue to finance the rehab cost into the purchase loan. Keep up the good work. Clayton Scott.

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