The Federal Tax Credit Is Dead - Almost
The time has finally arrived. The over analyzed, highly regarded, disdained, loved, hated, debated $8000 federal first time home buyer tax credit is coming to an end in three days.
Supporters of the tax credit point to the increase in home sales during the time the tax credit has been in place.
I tend to think that the tax credit did not create buyers, but just rushed them. I am a great example of this. I am getting married in August and was bound to buy a home anyway. The tax credit had the effect on me of rushing me to make sure I buy now instead of then so that I can take advantage of the tax credit. I mean, if you are bound to buy anyway then why not get the credit.
In my opinion, anybody that purchased real estate for an $8,000 federal first time home buyer tax credit is buying for all the wrong reasons. There are usually far greater implications to buying real estate than $8,000, for better or for worse.
Only the very wealthy with a lot of cash sitting on hand that were thinking of different investment options could have plausibly been, or should have been, persuaded by the first time buyer tax credit.
Having said that, odds are that the very wealthy wouldn't be first time home buyers. Maybe a very small insignificant percentage of the wealthy young adults in their early 20's who had yet to purchase a home would fall into this category. Not enough to have a huge effect on the housing market.
My guess is that we will see a small slow down in home sales in the next two or three months because in theory those May, June, and July buyers will have rushed and purchased in February, March and April.
In either case it is going to be incredibly interesting to see what happens and I am sure there will be plenty of debate in the blogs.