Should $8k tax credit be extended?

Update: Here's a new article from the Seattle Times that discusses the same $8k credit topic written about in the below blog post. Check it out.

This is the question of the moment. At least in real estate circles it is. The theory behind extending it and possibly expanding it is that the credit will continue to stimulate the housing recovery. On the other hand, it will obviously cost a lot of tax payer's money.

As a Realtor, I am definitely in favor of extending AND expanding the tax credit. On the ground, I see signs of market improvement and increased sales activity. However, we are not out of the proverbial woods quite yet. Perhaps allowing our politicians to spend at this rate will bite us later...and that's where I think I'm a bit shortsighted.

But in just speaking about what will help our housing market...I say give $15k to ANY home buyer for the next year. Now that's true stimulus.

Here's an interesting take on the impacts of extending or discontinuing the tax credit.

Buyers' market or sellers' market?

When people talk to me about the real estate market, they are often under the assumption that we're in a complete buyers' market. A buyers' market means that less than 45% of available homes are selling every month. This in turn shifts power to the buyer and gives them the ability to ask the seller for more concessions.

Articles in the media (such as this one) make the public think that they can submit low ball offers that ask for all closing costs to be paid and the seller's first born child.

In Seattle, certain neighborhoods and certain price ranges actually reveal a different story. Tons of 1st time buyers are in the market and snapping up single-family homes under $400k. In most of the in-city neighborhoods of Seattle, sellers actually hold much of the bargaining power.

Crunch time for 1st-time buyers...

We've reached the midway point in September and any potential 1st-time home buyer must get a home under contract soon or risk the possibility of not qualifying for the $8k tax credit. Average time to close a home from accepted offer to closing the transaction is about 45 days. Making an offer today and not experiencing any bumps in the road would mean closing at the end of October. Since today's lending market is the equivalent of a gravel forest service road, buyers are almost certainly going to experience at least a few minor bumps or delays. It's imperative to give yourself a cushion to close before 11/30/09.

Here's a Seattle Times article that discusses the countdown toward the deadline.

1st Time Buyer Alert!

Less than $200k for a cute townhome!