As the much anticipated First Time Home Buyer Tax Credit matured on April 30th (Date by which you needed to have an executed contract in hand, to close before June 30th, 2010 in order to benefit from the $8,000 credit) there has been much anticipation what would happen May 1st for the market, as well as folks that didn’t find a home in time.
Good, The Bad and the UGH-ly
The Home Buyer Tax credit gave first time home buyers, and buyers whom have owned their home for more than 5 years, to get a little extra bonus money, if purchase by a certain date. This meant, buyers interested in procuring a home were on a deadline. Just like 4-5 years ago, when home buyers were rushing to purchase homes due to 3 other reasons (low interest rates, rising housing prices, everyone was doing it) today the government created a “stimuli” to induce motivation to get real estate in motion. This didn’t seem to work the first time around in 2009, however in April 2010 the market was moving at a pretty good pace. You started to hear some of the good-ole terms, like “I have a 3-4 closing this week”, or “title company can’t fit anymore closing for that day.” It suddenly became common news that …”oh, its a good time to be in real estate right now….”
Today, May 10th….is it a good time?
I’m thrilled to report that it is, but things have shifted quickly. Here is what changed:
Buyers motivated by the tax credit ease up on “buyer” bargaining leverage in order to get the credit, when working with sellers aware that buyers are on a time line. Many sellers try to take advantage of this to either price aggressively and sell their properties, or leverage buyer time limitation. Multiple offers are becoming common, as inventory depletes, giving sellers a bit more for their property, but some buyers must walk away with disappointment. Buyers priced in lower brackets ($100k – $250k) are finding many home in distress which may not be able to close by the required June 30th date. Short sale inventory becomes a bit stagnant due to their reputation for being a lengthy transaction. Dependant on geographic markets, some REO and Home Seller’s aggressively priced are seeing offers when 1 day on the market. Sellers priced too high are still not getting enough activity, often blaming their agents for not enough attention, or exposure.
The Week of April 26th, 2010
Pressure sets in for deals coming together, but some hung up on last minute negotiations. Sellers are beginning to realize the shift in leverage may be coming and they have to ask themselves whether they can sell their home, without the tax credit motivation. Buyers are growing in the mind set that if they miss the credit, than they have the option of slowing down and looking at short sales and other “motivated” homes. Many others are counting on the credit and looking forward to getting through the process. Rates have raised .25% this week.
April 30th, 2010 …
A day of realization that any last Hail-Mary either needs to occur today, or it’s time to take a breath, regroup and take some pressure off the home search. Many folks that had not sold are evaluating listing strategy and considering renting out. Oddly, a quieter day than expected. The things that have been pushed up until this day were pushed to the limit. The ones not meant to happen were being observed as if standing on the side of a train station watching your train departing…however with a certain feeling of ease that another one may come again soon, and its not all that bad. Tomorrow is Saturday…some clients are just looking forward to taking a small breather.
1st Week of May
The Media has been relatively positive, and occasional Real Estate commercials are airing as if nothing happened. Sellers have just realized that their leverage is no longer in existence and this may be a good time to be more aggressive on pricing. A new construction builder in the North Suburbs announces a $35,000 price drop on inventory. Suddenly there is new buyer motivation: Motivated Sellers in fear, once again. Active buyers who didn’t get a chance to find something prior to April 30th still want to move or maybe just sold their home, and need to find a new one. Internet activity has picked up significantly, and Realtors from different companies are seeing similar signals of home buyers and tenants sending in online inquiries. Rental listings are gaining immediate momentum. Rental prices are expecting to rise…