This is gonna be one of those posts where I’ll look like a prophet or an idiot a few months from now. See, I’m gonna give my predictions about what will happen to the Lexington real estate market after May 1st. May 1st? Yeah, that’ll be the first day without the $8000 tax credit pumping up the market over the past few months.
No doubt the tax credit has gotten a lot of first times buyers pretty motivated. My listings are getting shown. One is sold and another has an offer on the table. I also have a couple of buyer’s that qualify for it. Oddly enough, I am not seeing anybody use the $6500 credit for folks who were already homeowners. All of my clients didn’t qualify for that. I guess there are too many hoops to jump through for that one. Reminds me of that old Howard Jones song from the 80’s that said “You can look at the menu but you just can’t eat. You’re the fastest runner but you’re not allowed to win. You can dip your foot in the pool, but you can’t take a swim.”
So, what does a post Tax Credit deadline market look like? How bad will it be? Well, I think we’re pulling a lot of the buyers into the market that would have bought this summer and maybe fall. So I see a little slow down ahead, but keep in mind it will be slower because we got the next several months worth of buyers early…….like a payday advance.
Something else to keep in mind is that the first time buyer market isn’t really a huge percentage of the market as a whole. They are important because they end up hitting a home run when the bases are loaded, enabling all the home buyers above them who want to move , but not getting eight grand isn’t going to keep them from buying a house when they are ready. There will always be people who get married, have kids, move to another town, takes jobs, get promoted, etc. Those things and more is what triggers the purchase of a home. Eight grand is just the icing on the cake.
I don’t think we’ll see a big price drop like some have predicted. The prices seem to me to be about the same as before in the first time buyer price range, so there is no reason to expect a decrease. We might see more days on market as we wait for the new buyers to enter the market. As usual, the houses that are over priced, in poor condition, marketed poorly, etc, will stagnate on the market just like always. They are the unsellables, so there is really no need to factor them into any statistics. They are houses merely with a Realtor’s sign rusting in the front yard.
Something else to consider is the threat of rising interest rates. I really don’t know what to make of them. I’ve heard good arguments for why they will go crazy as well as why they will stay near historic lows. My crystal ball isn’t big enough to have much of a prediction there. But, I do know that even talk of rising rates will motivate people to buy. So, I kind of think that may become the next bully that pushes people to buy. I guess the good thing is that will motivate not only first time buyers, but anybody thinking of moving in the next 3-6 months.
Okay, here is the part that will REALLY make me look stupid or brilliant…..Ready? I would not be shocked if they extended the tax credit again!! There, I said it. If they do, I think it will be for less money this time. Why do I think this? The government knows that housing has to recover. They already quit buying those troubled mortgage backed securities on April 1st, and I just have a hard time believing they are ready to totally take housing off of life support. We’ll see I guess. If I am wrong, expect this post to be gone on May 1st.