First time home buyers are driving the housing recovery however they may soon lose the incentive which has helped spark their interest and help them gain the confidence to buy in  a down market. In order to qualify for the $8000 tax credit, sales must close on or before November 30. No one knows whether congress will extend this or offer an alternate solution, however as the November deadline looms  NAR and other industry groups are lobbying Congress hard to take some kind of action.

According to NAR, the first time home buyer stimulus will have resulted in generating somewhere in the neighborhood of $350,000 sales, but what I find very interesting is that each one of those sales (again on average) pumps approximately $63,0000 back into the Economy.

If you think about the typical new homeowner, they need furniture, washer and dryer, usually want to paint or recarpet. I know when my son closed on his first home earlier this month, there were numerous trips to Home Depot, craigslist appliance purchases, furniture, lamps....etc. Money going into the private and public sector of the market.

Unfortunately, many of these first time home buyers are only able to consider short sales, which can take 3 months or more to close, risky when you consider we've just hit that 90 day window until the deadline. Investors have priced them out of foreclosures in many markets and "regular sales" are receiving multiple offers with escalation clauses.

It will be interesting to see what Congress ultimately decides to do; whether a new incentive will be offered or the current one extended.