The $8000 first-time homebuyer tax credit has come and gone.  What has happened to the Prince William County market in the past 45 days since the tax credit has expired?  On the ground, it feels like sales - and interests- have slowed considerably, though the current numbers don't bear this out just yet.  From each price point below; prices, days on market, and other indicators have remained relatively unchanged over the past six weeks. 

A couple of things that do not jump out in these number, however, is the number of Short Sales that the banks are trying to get closed before the June 30th.  They are putting foreclosures aside in an effort to liquidate Short Sales contract and perhaps get another $3,000 per sale from the HAFA fund.

So, what will happen after July 1st?  Home prices in Prince William County, Manassas, Manassas Park, and Woodbridge are actually up because the level of inventory over the past 6-12 months has been so low and the demand for homes was artifically stimulated by the tax credit.  The one most unreported incentive for home purchases is the current mortgage interest rates - at or below 5%!!

The ability to borrow $300K-400K at 5% or less for 30 years is just amazing.  In a typical economic situation, interest rates would be well north of 10% in an effort to control inflation.

Bottom line: Although the market indicators haven't changed yet, we'll likely see a slow down before the summer is over.  However, even without a tax credit, this is the time to take advantage of record low interest rates while it's still possible because the savings on interest paid is worth way more than a one-time tax credit write-off.

Hap

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