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April 30th, 2010

Your Last Chance for the Homebuyer Tax Credit

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The clock is ticking: There are only hours left to sign your contracts in order to take advantage of the homebuyer tax credit.

We want to know if there are any last-minute shoppers out there — is anyone trying to get their contract signed today?

While there’s about zero chance any announcement about another extension of the homebuyer tax credit will be made before midnight tonight, the chances of any announcement claiming another extension (at any point) seems to be getting less and less.

We reported on April 14 that three lawmakers who previously advocated for the homebuyer tax credit had no plans to push for another extension.

Last week, our friend Nick Timiraos of the Wall Street Journal wrote that even those in the industry who would stand to benefit the most from the homebuyer tax credit, and who had previously advocated very publically for the original credit and the first extension, had no plans of pushing for another extension:

But industry groups now say that the tax credit has run its course. “It’s time for the housing market to stand on its own two feet,” says a spokesman for the National Association of Realtors. A spokesman for the National Association of Home Builders says the group isn’t “actively asking for an extension at this time.”

Well, one thing’s for sure, readers of this blog have spoken clearly on how they feel about a second extension of the homebuyer tax credit:

Should the homebuyer tax credit be extended again?

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3 Responses to “Your Last Chance for the Homebuyer Tax Credit”

  1. Tweets that mention Your Last Chance for the Homebuyer Tax Credit | HSH Financial News Blog -- Topsy.com Says: April 30th, 2010 at 2:01 pm

    [...] This post was mentioned on Twitter by HSH Associates, Geri Salsig. Geri Salsig said: Your Last Chance for the Homebuyer Tax Credit http://ow.ly/17e5QZ [...]

  2. Gordon Says: April 30th, 2010 at 2:14 pm

    Since I’m not in the market for a house presently, I fall in the 1% of “couldn’t care less”. That being said, I feel that the housing market may be in for a bigger downturn than many expect now that this tax credit is done with. If you think about it, any potential buyers who rushed to get a house just to receive the credit, means that there will be that many less buyers now that the program is over.

    I have read that many realty companies and housing agents may try to offer some incentives of their own now that the government has ceased the tax credit. This could help ease the transition period from now until the market rebounds (if ever). Does HSH have any insight on this?

  3. Tim Manni Says: April 30th, 2010 at 3:08 pm

    Hey Gordon,

    Good to hear from you again. I’ll start off by saying that you touched upon a concept that many critics of monetary incentives have also expressed: borrowing demand. You said, “If you think about it, any potential buyers who rushed to get a house just to receive the credit, means that there will be that many less buyers now that the program is over.” That’s true, what these incentives (i.e. the homebuyer tax credit) do, perhaps unintentionally, is borrow from tomorrow’s demand. People who would have bought a house tomorrow are going to buy one today instead. Some call it “a false-sense of demand”. The same arguments were made about Cash for Clunkers. Auto sales were through the roof while the C4C program was operational, yet when it ended, sales fell to record lows.

    All that being said, the housing market does have a few factors on its side. Mainly, mortgage rates remain at record lows. Also, real estate prices are cheap, credit is beginning to loosen, the economy is beginning to recover and we are entering the busiest homebuying seasons of the year (spring and summer). Potential homebuyers have to expect that rates will either firm or rise in the coming months and/or years. As we say, rates are so low to begin with, there’s only one direction for them to go: up. We’ve been telling people, let the market conditions dictate your desire or ability to buy, not a tax credit (that’s just an added bonus).

    You bring up another interesting point: “I have read that many realty companies and housing agents may try to offer some incentives of their own now that the government has ceased the tax credit. This could help ease the transition period from now until the market rebounds (if ever).” Interestingly enough, I just Tweeted about an incentive that Coldwell Banker is offering: homeowners that agree to knock $8,000 off their asking price will have their property featured in Coldwell’s local ads. No way to know yet if this will entice any sellers (many sellers are frustrated these days: many can’t seem to get a “reasonable” price, and knocking off an additional $8K may not seem like too attractive of a deal.

    Thanks for commenting again, I hope I was able to answer some of your questions,
    Tim

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About the HSH Blog

HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

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Tim Manni

Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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