TIMING HOME PURCHASES

Much has been said today of the first time homebuyer tax credit extension and expansion to current home owners. For details, I suggest this as the most complete. NAR

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Aside from the money, what does the tax credit mean to you and why worry about it now? The expectation is to keep the housing market moving in the right direction. After all, doesn’t it make sense that if you might buy a home in the next 18 months or so, that you do it while you can get the gift of a tax credit? Why would you leave that money on the table?

However, keep in mind that that “right direction” is more of what we are seeing in the lower price ranges, with competing offers, and fewer concessions on homes that may be gone before you see them.

Here are some additional reasons to think about the tax credit now:

New construction
For anyone that wants to build a home, it is important to understand that the process from contract to closing often takes in excess of six months. The actual construction is only a part of the time that goes into the process, with permitting and county inspections absorbing up to two months while customized plans, selections and title work easily can absorb another.

Contracts for a home to be built in time to take advantage of the tax credit need to be in place before the end of the year. That means there are about 45 days to choose a community, builder, lot and plan.

Buyers that must sell a home
No one can say how much time it will take to sell your home. Each situation is a little different. It’s hard to say how long sold homes have been on the market. Through a quirk in our MLS system those numbers are hard to come by, because “days on market” refers to the current listing period only.

We do know that there was approximately an 8 1/2 month supply of homes on the market at the end of last month, assuming last months rate of sales would continue. Even in the faster moving under $200,000 market, there is approximately a 6 month supply.

Even if you don’t want to be on the market during the holidays, now is the time to sit down with your REALTOR® and put together a plan. Waiting may cost the $6,500 tax credit.

Homes that will be financed
Interest rates are near historic lows. How long that will last is anybody’s guess. If we are indeed in a recovery, as it appears, some inflation is to be expected and that means higher interest rates.

Higher interest rates translate into decreased buying power for purchasers. For sellers higher rates mean fewer people can actually afford the home.

Only you can decide what is best for you and your situation, but now would be an excellent time for you to sit down with a REALTOR® so that you have all of the information to make a good real estate decision.