Tax Incentive Extension Provides Relief for Buyers, Market
Lawmakers recently passed the tax credit extension to September 30th, 2010. There was a collective sigh of relief by a large number of people when this announcement was made. It may have caused quite a catastrophe if it had not been extended, affecting home values and simply eliminating thousands of buyers who need the cash for reserves or repairs.
To clarify, this extension remains in effect for only those who are under contract by the end of April of this year. The extension has been granted to accommodate those buyers who are still waiting for final approval from lending institutions. These bankers are the final decision-makers of “lender owned” or “short sale properties” in Real Estate transactions. Some buyers have waited for several months to get their answers and some have experienced 9-month waiting periods. So the extension is warranted and outright fair.
On the finance side of things, buyers who were going to lose this credit were threatening to walk away from contracts if they did not close by the deadline.
Simply put, they wanted the free money! Who can blame them, right? It has been a great way to get buyers back in the marketplace but maybe too much weight was being placed on the incentive. We have been seeing all types of buyers including those with high down payments or FHA borrowers. The activity has been on the positive side; however the most compelling statistics will be the real estate figures of the third quarter of 2010.
In the third quarter we will be able to determine if this tax incentive, not just the extension, was worth the effort. How well can the real estate market remain buoyant?
All of the naysayers claim that the market has yet to drop another 10% before the ‘bottom’ has been reached. I would venture to say that if the extension were not granted, then we would have experienced that drop faster than these naysayers predict. I am optimistic that our values can hold steady, but time will tell.