Dan, Other/Just Looking in Yorktown, VA

What will the real estate landscape look like AFTER the $8,000 tax credit expires?

Asked by Dan, Yorktown, VA Thu May 21, 2009

There seems to be a lot of discussion where the buyer is concerned (hurry up and get the good deal before it expires!!!) but not a lot on the ramifications for the seller. For instance, shouldn't the seller have as much urgency to get their home sold prior to expiration since it only makes since to assume that most serious buyers would have gotten in under the wire to get the credit? Do you foresee an extention of the credit? Maybe even "sweeten" the pot" if it doesn't have the intended affect on the market like they did last year (don't those that took that $7500 interest free loan last year look foolish)? As a perspective buyer, I really don't see the urgency especially in our overpriced market. Any thoughts?

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Well Dan, it's finally April 30th so we'll see! Personally, I could use a little break..maybe go back to working 6 days a week instead of 10. I only had a few last minute buyers to get ratified this week but 4 of my listings have gone under contract so I am very happy for my sellers. They were all priced right so I feel they would have sold anyway, but I'm sure the tax deadline helped get it done ahead of the listings' absorbtion rate. For my sellers who will only price right in the middle of market value, it is going to be tough but for those who will and/or are able to take my advice and price it to be the best value, I really think they will still sell despite the end of the credit. There are still buyers motivated by other things such as retiring, getting settled into a home in time for school, meeting a 1031 xch deadline, etc..

Maybe the credit ending in spring will help cushion the possibility of a stalled market. I just hope it goes to a normal market. I'm a little over the extremes!
1 vote Thank Flag Link Fri Apr 30, 2010
Dan I don't know about Yorktown, but in No Va, in the "starter home" price range, we have multiple buyers for every sale. Just this afternoon, one of my fellow agents said he had 3 townhomes going on the market in the coming days; and FOUR of the agents that overheard this - including me - jumped asking questions (how much? where? short sale? traditional?). We were thrilled. We are working with people and getting bid out and bid out of deals, our buyers are crying - literally - about "losing the home of their dreams" in a bidding war. Prices are going up and buyers are dealing with things that, quite honest if I were a buyer, I don't think I'd have had the tolerance for - like the short sale process. I wonder if that will subside after the expiration of the tax credit, but who knows. It has been something that's been steadily building for a year now in my area - for a solid year.

Lots of people will think agents are talking this up and trying to create the illusion that the market is changing; and that the national data you're looking at that was collected months ago, without intimate knowledge of the market, tells the real story. Believe what you want. But, the market is changing, and you may have already missed the bottom.

Beyond that, don't try to time the market - youll lose. Buy when it is right for you and your family; and buy for the long term so you can ride the tides of the market. Read David Bach, Automatic Millionaire Homeowner (note: this does not say overnight millionaire - it's real advice for real people).

Good luck.
1 vote Thank Flag Link Thu May 21, 2009
Hi Dan,
Wait another year to buy, prices are declining, save another 6-15% on the price. On a 400K house, that's a savings of 24K - 60K. Good Luck
0 votes Thank Flag Link Mon May 3, 2010
I grew up on 107th street I think the vet was on 82nd. I guess I expected home prices to be a lot different around there but I think some were actually higher. I visited family that just bought in Sturtevant in an average working (think prices were 150 - 250 in that neighborhood) and they paid about what I would think a similiar home would go for here.

For this month, 20% of our office sales were over the $400 range, which is about twice the average price range so that was surprising. I can't even describe how busy this last week was for me..negotiated three home inspections just yesterday. A lot of people were crushing in sales these past few weeks. Surprisingly, two of my buyers did not know they qualified for the credit. It really is surprising and you'd think that people would know about it but you really don't see a lot of coverage on mainstream media. Maybe if they covered it on 'entertainment tonight' people would be aware of it. For my third party approval listings, the end of the credit is, in my opinion, good. Buyers who were counting on the credit were not willing to ratify a contract with that contingency for fear of not closing on June 30th. Now we can quite wasting time negotiating and countering with buyers who won't ratify without some written assurance and deal with buyers who are willing to exchange time for a better deal. We'll see!
0 votes Thank Flag Link Sat May 1, 2010
Lori,

I live not too far from Bristol. You had an awesome veterinarian who helped us with our dog when no one else would. I have a soft spot for Bristol. Don't blink or you'll miss it.

Prices in Wisconsin are really all over the board, you cannot even go by city anymore. You have to judge stats by pockets within the municipalities. And although some of the higher end homes are still needing to come down a bit, for the most part, I'm seeing absolutely unbelievable price reductions all over the board. I do not see a continuing drop though. The prices are starting to hold steady and in the lower priced homes are actually starting to come up.

Any thoughts?

Linda

Linda
Web Reference: http://www.lindacefalu.com
0 votes Thank Flag Link Fri Apr 30, 2010
LInda,

I was born at St. Catherines in Kenosha..raised in Bristol by Lake George Tavern so I got the 'church and bar' connection covered!

Our market got a little crazy here and we have seen an adjustment in prices. 6 - 15% depending. I just went to WI a few weeks ago and was pretty surprised that the prices there were higher than here!
0 votes Thank Flag Link Fri Apr 30, 2010
Dan,

Only one comment for you. Your quote, "I really don't see the urgency especially in our overpriced market. Any thoughts?"

Are you living on another planet?

Linda
Web Reference: http://www.lindacefalu.com
0 votes Thank Flag Link Fri Apr 30, 2010
By the way, the buyers that thought they were getting orders ended up staying but waiting helped! The house they had their eye on dropped about 10% and the closed on it a few weeks ago.

I do have sellers moving to TX and they told me that the house they wanted went UP recently. We think the seller thought he could squeeze a little more. My sellers don't qualify for the credit anyway so they have decided to wait and do their shopping starting this week! So, they will buy but expect a good value.
0 votes Thank Flag Link Fri Apr 30, 2010
It just depends on the buyer. I had to tell one buyer of mine last week that I felt they should wait since it was rumoured that she may get orders early next year. The tax credit would come in handy for her but the risk was too high. I have other clients who are trying very hard to find a house in time (just wrote 5th offer for them - mulitple offer situations) because they will be here for a long time and like the idea of having a built in emergency fund. Their rent is more than their mortgage payment will be and they can get their own place. Most of my clients are planning on using the money to pay off bills, establish an emergency fund, make upgrades to the home they buy or all three. I don't know of any agents suggesting a higher list price due to the credit so I don't see prices inflated for that reason but you are right that sellers in the first time home buyer range should be told that not only is the year going to be winding down but the end of the tax credit will take the wind out of some buyers sails. I also don't think that any agent is going to be able to convince someone to buy a home these days with some 'urgency' speech but you'd be surprised how many buyers have heard about it but didn't know what it was or that they actually qualified for it until we explain it! Maybe it's that the average person isn't used to getting a break..
0 votes Thank Flag Link Fri Aug 7, 2009
I think Buyers should "get while the gettin is good". who knows what will happend after Dec 1? We are already seeing the market pick up significantly. Though not reflected in the data yet, I can tell you subjectively, that Buyers are out looking and we are seeing multiple offers on fairly priced houses.

As for the effects on the sellers, we are seeing well priced properties in good condition seller more quickly and for slightly higher prices than the end of '08 and beginning of '09. As I have no real data yet to back that up, I was thinking to myself that prices on the Peninsula are rising, and one of my Buyers just voiced that out loud last week, which helped her to decide to stop looking and make an offer. She said she has been watching data on Trulia and Zillow for some time and based her decision on that.

Another factor: because of the government intervention, mortagage lenders are encouraged to work out a loan modification for seller who are behind on payments, rather than foreclose. There has basically been a hold on foreclosures, which has decreased inventory. That has raised the interest of buyers (and perhaps prices) in those "traditional" sales. Another subjective indicator of market improvement: My home inspector reported he has not inspected a vacant home in 2 weeks-- everything has been owner occupied, where earlier this year, almost all of his inspections were on vacant properties.

My concern for folks who wait is the interest rate. As housing prices rise, so will the interest rates. Right now, we are still rates in the mid to upper 4's -- that is unbelievable!! Again, who knows how long that will last? The decision to buy is based on a lot of personal factors, but if anyone is even considering purchasing for the first time - or moving up--it doesn't hurt to check out the facts: call your friendly neighborhood lender and see exactly what your monthly cost would be with the low rates along with your tax deductions for mortage interest. See what fits into your budget, then go online and see what you can afford. Is it better than where you live now? Do you want to start building equity? If you haven't owned property in the last 3 years, would a check from Uncle Sam for $8000 help you?

Boy, I wish I was first time buyer right now-- I can think of many ways to sepnd that check!
0 votes Thank Flag Link Thu May 21, 2009
In this "overpriced" market there are many great deals to be made right now. As a buyer you say you see no urgency to buy. I do agree that the pot has gotten sweeter to try to stir things up and it might get even sweeter still but we're seeing increased activity in the market and houses are selling every day right now. You mentioned those that took the incentive last year look foolish but who will look foolish if all the incentives are taken away next year and didn't take advantage of them now?

It's like the stock market - if I sell now I might miss out on the price going up more, but if I don't sell now the price might go down. The only way we know for sure is if we wait and see. By that time it's over one way or another. If you wait and the price goes up awesome! But if the price goes down you just missed the boat. If you're in the market to purchase now, evaluate your situation and your needs; short-term, long-term, investment, etc.

Today we're in a strong buyers' market; what reason could there be for a ready, willing, and able buyer NOT to buy?!? Today buyers have choice of homes, incredible interest rates, and all sorts of incentives! I guess we can always wait for that sellers' market to come back and have to fight for a home, forget about home inspections, pay more than appraised price...
0 votes Thank Flag Link Thu May 21, 2009
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