Well we find ourselves 6 days from April 30, 2010. It was not long ago that we were near the deadline for the first time buyer tax credit of November 2009. There is a new extension for military and those serving overseas. Do you think we will see another extension for the general public? Will the economy be better if we do get the extension?
I DO NOT believe they should extend again and here are 3 good reasons:
1. Cry Wolf Syndrome - The US Government and President Obama already extended the deadline once. The current extension will end at the end of April. "The Boy Who Cried Wolf", one of Aesop's Stories can shed light on the outcome if the extension was extended again. "Wolf, Wolf" could be translated today to "Deadline, Deadline". If the Government extends it AGAIN the buying public will no longer believe there is a true deadline and it could have a negative impact on the positive upswing the National Real Estate Market has seen with sales in the last 3 months.
2. Economy's Running Cycle - When running and beginning training it can really hurt and can even cause serious injury if not properly approached. With the economy we have used the band-aid approach up to this point and we have tried to soothe the aching economy. But at this point we must allow it to run its course. The economy is cyclical and at this point we must let it "run". Many of my contemporaries have stated that "the economy has recovered and so has the Real Estate market!" I do not know if I hold the same enthusiasm or insight. I do believe that I am thankful to live and work in the Metro DC marketplace where we are the most resilient area in the US and a great place for jobs and job growth.
3. Interest Rates are KING - I don't believe the TAX CREDIT ultimately shapes the entire Real Estate market. I have seen it engage first time buyers and buyers that could not move without it, but it has not impacted most of our clients purchasing homes priced over $500,000. Interest Rates and Sales Prices are typically an inverse relationship. The lower the interest rates, the higher the sales prices and vice versa. When interest rates increase it dramatically effects buying power and ultimately the seller's bottom line. There are many people buying homes and refinancing right now because rates are SO LOW. That will not change when the credit goes away.
So where does that leave us in the current economy and reviewing the Real Estate Market?
The tax credit and move-up/down buyer credit is a great tool that you should use if you are already looking for a home. It should NOT be the main basis for your decision to purchase a home.
I do believe the interest rates will increase in 2011 so if you are thinking about purchasing you may want to do it while interest rates are low and you have a higher buying power.
With all markets it can be cyclical. The true winners in any industry/investment are those that can control when they buy and when they sell. For more information on timing, rates and the best investments contact The Nellis Group today...