I have blogged before that the stimulus package, set to expire April 30, has fulfilled it's purpose. Sales in Westchester for the first quarter of 2010 have dwarfed those of the 2009 first quarter. This may seem hard to believe, but that $8000 tax credit is now over a year old. The Westchester County housing market, good or bad, has been reflective of this law for quite a while. With no substantive efforts I know of to extend the credit, after May 1 Westchester will have a more organic market with which to either put up or shut up.
So what will happen May 1st? Will buyers give up, now that the tax credit will be gone? Will Westchester sellers get more motivated now that a small piece of leverage they enjoyed will be gone?
Yes and yes. It will remain a buyer's market. Here is what I think will happen after April 30, 2010.
Every house will lose $8,000 worth of value. Poof. Buyers will try to compensate for the loss of the credit by negotiating lower prices. Sellers will have little choice but acquiesce if they want to move.
Sellers will get more motivated, and in many cases, desperate. Because of the perception that buyers have less reason to act, sellers will try and create their own incentives by lowering prices, being more negotiable, and doing more to make the deal work.
Smart buyers will exploit a more pensive seller population to their advantage. Think of it this way: after "cash for clunkers" disappeared, crickets began to chirp again in the auto industry. Buyers who bought afterward had a captive audience at the dealership. The same will happen in housing.
For better or worse, the buyer herd will thin on May 1st. Fewer buyers will yield fewer showings, fewer offers, and fewer deals. New listings to the market will be priced more aggressively. People who have to sell will cut as low as they can go and then some. The buyers who remain in the market will likely strengthen the upper hand they have already possessed for the past few years. it will mean more than the seller throwing in the garden set or snow blower. The market will try to compensate for what the government takes away and smart buyers will take advantage. I welcome crystal balls and differing opinions.
I don't know whether to tell you to buckle your seatbelt or tighten your belt.