* 10% of the respondents didnâ€™t know about the tax credits*
* 67% are motivated to buy by the tax credits offered
* 62.5% feel the pressure to buy right now
* 16% will actually stop searching for a home if they donâ€™t get the tax credits. Shocking!
You can see the results or even still respond to the survey at: http://tinyurl.com/nsewa4
That said, without a doubt the tax credit has shifted demand forward for the first time buyer leading to lots of competition in this segment. The original tax credit had this effect... then the government opted for a whole 'nother level of stupid and allowed the credit to front as a down payment, thus creating effective zero-down payment purchases ala 2005. Smart folks we got there in Washington, and you gotta give credit to those NAR lobbyists.
I think it's safe to say the real estate market has been burning through the inventory of first-time buyers at a significantly faster-than-typical pace as a result of this credit and the bleak employment environment is refilling this pool at a far slower-than-usual pace. Those two factors WILL converge and demand will drop. I'd say the Nov.30 deadline is a likely point. There was an oversupply of would be first-timers who sat on the sidelines for a couple years when they were priced out of the market. We'll have to see how that plays out. I'm guessing we're going through the segment fast enough to have cleared most of them out already.
Supply is already being artificially constrained and I find it highly unlikely supply can be further curtailed. In my estimation the opposite will occur and supply will expand, probably rapidly. That'll be the point where all those who seem certain a six-year bubble in a illiquid asset marketplace miraculously corrected itself in a mere two years discover just how wrong they are. The recent first time purchasers who bought a home they didn't really want because they "just wanted something" and will "trade up in a couple years" are going to learn the same lesson.
Staff and Wire Reports
Published: Tuesday, March 2, 2010 at 1:00 a.m.
Last Modified: Monday, March 1, 2010 at 7:55 p.m.
( page 3 of 3 ) I promised not to talk about the other two pages you may be forced to wait and miss all the fun.
Spring may be eternal.
Also, the percentage of current homeowners looking to buy was nearly flat from January to February, according to a poll of 1,500 real estate agents by Campbell Communications and Inside Mortgage Finance.
The Obama administration has pumped billions into the housing market, hoping it will lead the nation out of its economic doldrums. Efforts to modify loans facing foreclosure have largely failed. So hundreds of thousands of discounted homes will hit the market this year, stressing a market desperate to balance high supply with sluggish demand.
"You've got a really big problem that requires big guns, and the tax credit is just not big enough," said Roberton Williams, senior fellow at the Tax Policy Center in Washington.
Agents believe the credit's true test will come in the spring, the busiest home-buying season. Concerns about high unemployment could keep buyers on the fence.
The simple answer to your question is, "Not Really". There are so many other factors driving the economy right now, low interest rates and low home prices are the primary factors. There are quite a few people that are deciding to wait until after Nov to start shopping so you'll pretty much continue to see multiple bids on well priced homes. My suggestion is that you keep an eye out for all good deals that come up and then decide the pros and cons of purchasing now and or later. Good luck to you.
Low prices and low interest rates, I believe, drive the market. The incentives are gravy. The first time tax credit is encouraging buyers to get off the fence, sure. But the tax credit is limited to UP TO $8,000 or 10% of purchase price. And based on their incomes, not all first time buyers qualify for this tax credit.
In certain price ranges, buyers are also competing with investors who are paying cash. Some parts of the east bay in northern California, we have had as many as 80 offers on the same property. Overbids has become the norm.
We are seeing the following:
* low inventory levels
* shorter period from the time a property is listed to getting in contract
* sold prices are moving upwards (slightly, but we're seeing the prices inching upwards). Although they are lower than they were, say in 2003, nonetheless, in our market, it's become a seller's market again! Of course, this time, some of the sellers are banks.
If you have access to mortgage calculators, why don't you look at certain scenarios:
Assume you can afford to buy a house for $250K, with a 30-year mortgage at 5.5% interest. Then see what the monthly payment compares if your mortgage rate changes by .5%, .75%, 1%, etc. What does it look like?
No one can predit what the interest rates are going to be tomorrow. Timing the market could be a challenge. Will you be able to find a home that you like at the price you want? Can anyone really guarantee where the market prices are going to be?
Some real estate experts and observers said that the bottom of the market was three months ago. When I look at the trends in specific cities in the east bay (namely, Hayward, San Leandro, San Lorenzo CA), it appears they may be right.
Most REOs are priced below market to generate interests.
Listings being REOs or short sales will still have offers above listing price after Nov. 30.
Jes Sierra, B.Sc., RealtorÂ®
Your top source for buying or selling real estate.
One thing I have learned in my years in the business...I can't predict what will happen next - especially in this market!
If you think you might save money bu waiting out the "bubble'...think again...there is a possibility that the tax credit will be extended....who knows?
If you are ready to buy now..then buy now.....prices are already way down, so you are already saving money! Trying to strategize based on the tax credit, in my opinion, is a waste of energy. When you find a home you love, make an offer. Who knows where prices will be next month or in 3 months or next year.
Good luck with your search.....
Prudential NJ Properties