Your Exceptional Life

Time is running out for the $8000 Federal Homebuyer Tax Credit.  Congress has no plans to extend or renew the credit.  It’s hard to say what kind of effect this will have on an already fragile housing market, but it’s safe to say that there will be a bit of a pull back.  The nice by-product of this society’s 24-hour news cycle and voracious appetite for instant gratification is that whatever the reaction is in the market place, it won’t be for long. 

Consider that the mortgage meltdown began in 2008.  The worst of it is already over.  Our market has stabilized and has been pretty stable for almost six months.  The meat of the meltdown only lasted about 20 months and this country managed to turn it around.  That’s not to say that there aren’t families still in trouble, there are.  Until the employment situation stabilizes there will still be families battling to keep their homes, but the worst is over.

I’ve thought in our marketplace that the $8000 doesn’t really matter much.  While it certainly matters in a $50,000 home in Pittsburg or on the outskirts of Antioch, it doesn’t matter much in a $600,000 home in San Ramon.   Basically if the purchaser can qualify for that home, they may very well  make too much money to qualify for the credit.  It helps in places where a home can be bought for $250,000, but if homes are being bid up by $10-20k, an $8000 credit becomes negligible.  It could be argued that the purchaser ended up with $8000 more in purchasing power, but even if the market pulls back that same $8000, in most Contra Costa marketplaces, it’s not much. 

At the end of the day, buyers may recoil slightly when the credit expires, but as I’ve always said “People have to live in houses”.  Unless that changes, the marketplace will always recover.