You are making an interesting point, Dan. Certainly the tax credit has stimulated demand. By design, it is a “stimulus” plan. In combination with the low interest rates, and favorable FHA programs, many people who were renting are doing the math, and finding they will pay less per month if they buy. People who were waiting out what was a declining market, have decided it is time to make a move, and have taken advantage of record low housing prices. It is an extraordinary combination of opportunities.

Next spring, when the tax incentive expires, prices may be up or they may be down. There are more variables determining housing prices than the number of first-time buyers in the market. Foremost among them are the general economic conditions and employment levels, which will not stay this bad indefinitely.

My advice to my children, who were both renting, was “buy now. “ Shop the market carefully to take advantage of unique opportunities in it. The market is down, interest rates are down, and the government is paying you to buy a home. Go for it!