Last week the extension for closing was not passed for the Home Buyer Tax Credit. It was thrown in with a bunch of other things and was turned down. However, it was then put forth as a separate bill and finally passed.
This bill affected around 1,800 buyers who would have lost the credit if they didn’t close their transaction by June 30th. They now have until September 30th, 2010, to close and still qualify for the credit of $8,000 for first-time buyers or $6,500 for other buyers.
There are mixed emotions in the real estate world about this credit and extension. Many feel that these credits were a waste of taxpayer money and that the government should let the real estate industry heal itself without intervention. They feel these buyers would have purchased a home anyway and the credit just spurred some of them to get off the fence sooner than later.
With interest rates hitting 4.5%, many of those buyers would have purchased now and would have had more buying power with such low rates. Some feel it just created a false start and actually used up all of the available buyers that would have been in the market at some point in time this year and last.
In fact, most of us in the industry are feeling a lull since the tax credit expired April 30th. That is when an accepted contract had to be finalized. The new extension is just a closing extension, but the contracts had to have been accepted on April 30th or prior.
Many of us felt a surge towards the end of April when some buyers were frantically trying to find a house to get the credit. I was working with a young woman who could only afford handyman specials. I knew she was over her head with these homes and I told her not to buy something just so she could get an $8,000 credit. I told her she’d put more than that into these homes, and some of them would not have passed an FHA appraisal without required work done. I think she gave up entirely as I didn’t hear from her since the credit expired.
And it’s buyers like her that would have purchased something that they might not be able to handle down the road. There was one Oak Lawn home we saw that had some potential. I could tell she wasn’t loving it but it was the best one in her price range. It could very well have sold FHA with few, if any, required repairs. But the house needed updating and I felt she would have regretted purchasing it. She obviously didn’t like it much since she wasn’t interested in writing an offer, and we were down to the deadline.
Many in the industry felt that the extension should have been left alone. Agents and others cited the fact that so many buyers waited until the end of April to find a house and that it wasn’t guaranteed that they could close by June 30th with ever-tightening mortgage standards.
Others showed their displeasure at buyers who made offers on short sales knowing that it can take months just to get an approval and even more time to close after that. But there were definitely some buyers that took that chance. I had a buyer who did although she knew there was a chance we wouldn’t be able to close in time for the credit. She took the risk and won, as she was able to close before the original June 30th deadline.
Others feel that these credits and extensions are giving some people the feeling of entitlement. They should get
something in return for making a purchase, and if this becomes a mindset there will be people that won’t buy since they’re waiting for the next hand-out to come along. And this all gets paid for by us taxpayers, and our children and grandchildren in the future.
With our current interest rates I simply can’t see a better time to buy. These low rates can make up much more than $8,000 over the life of a mortgage. Prices are still dropping so there is a combination of low prices and low rates. Forget a credit, take advantage of this current Buyer’s Market. If you continue sitting on the fence it is very likely that you will be paying more down the road.
If you’re interested in Oak Lawn homes (or any other southwest suburbs), give Judy Orr a call at 708-536-8200 or fill out the Home Finder Form and get listings sent directly to your e-mail.