Well, it’s finally here folks–a Housing Market without any tax credits to entice buyers. The First Time Home Buyer Tax Credits are officially over in 2010, yet I’m still getting loads of questions about extensions, and even other possible incentives the government may have in mind to get people excited about the housing market.
To be honest with you, I don’t see the government stepping in again to offer any sort of tax credits to first time home buyers, or any other set of real estate buyers for that matter. The reason they decided to offer such incentives is that the housing market got so out of whack back in 2007 and 2008, they knew something had to be done. Now that we are somewhat stable as far as home prices and inventory are concerned, there is not the sense of panic most people had a few years ago, and therefore no reason to offer “cash for closings.”
Part of the cause for the panic came from banks and mortgage servicers who were repossessing homes by the thousand, and immediately flooding the mn housing market with tons and tons of REOs and foreclosure properties. With the higher supply of homes available, demand shrunk amidst plummeting prices and tighter lending guidelines. This all added up to buyer reluctance and a very low number of sales, and I think banks have learned their lesson in regards to the supply/demand ratios in the area housing market.
Everyone’s eye will now be on the national housing market to see if we continue declining, hold steady, or even slowly build off the 2009 momentum created by the tax credit and low interest rates.
It’s really anybody’s guess–I’ve heard people on both sides of the issue give convincing arguments with plenty of statistics, so I don’t know for sure what’s going to happen from here on out. I believe we may see another 2-3 years of small decline or moderate growth, but nothing that will be complete boom or bust like we saw 3 or 4 years back.
If something catastrophic does happen to accelerate another huge decline, I could absolutely see the federal government institute another type of tax credit or buying incentive in order to jump start the housing market and economy. But for now, I guess we’ll have to wait and see how things shake out for the rest of 2010.
The good news for first time home buyers in mn is that there is probably going to be less competition for you when you get ready to purchase your first home. So you could still get a great deal on a house even without 8 grand in your pocket.
Keep checking back for more updates on the housing market throughout the year.
