I think sales will go down whether it expires or not. If you have a store that advertises a sale once a year, you get a mad rush of buyers. If you have a sale and extend it for what appears to be indefinitely, people will just go when they feel like it, and assume that the incentive will always be there.

What amazes me is that people are not taking advantage of this market, with or without the tax incentive. Interest rates are low, prices are low, sellers are creative (owner financing, lease option, whatever to get rid of the house), and people are not buying.

In Lee County, Florida, you can get homes in Cape Coral, Lehigh Acres and Fort Myers for between $50-$100K. When you consider interest rates at 5% (more or less), getting an FHA loan on 100K would only cost $536.82. Add in taxes & insurance, and you might bring it up to $800 (or less), which is probably what people are paying in rent. So, if you have to put 3% down and closing costs (if the seller won't pay them), you are still going to pay out less than 8K to get a home. Amend your 2009 return, get the 8K refund, and you have more money than when you started and are NOT paying rent.

I even offered to sell people a house for $5K down (plus closing costs), and once they got their 8K refund, give that to me as the rest of the down payment (after the fact), and they could own the house without credit or getting a new loan. Yet, all the respones I got (on Craigslist) was that it was some sort of scam, or that I was somehow a Realtor or Mortgage Broker (I am neither) advertising my business.

Basically, I was willing to take a chance on someone, offer a GREAT deal, and when people see something that appears too good to be true, they would rather bash it than ask questions.

So, despite the economy being in a position where monthly payments are cheap, free money from the government, etc, human nature is to be stupid and put down anything that one does not understand.

I'm not going to predict where the market is headed, so I am using this video to create urgency now.  It entertaining, grabs people's attention, and sends a message.  Feel free to pass it on.  www.youtube.com/jeremysmith01

Below is a portion of what a freind in loan origination sent me:

With these economic weathervanes pointing in the right direction, then, and with the imminent expiration of the $8,000 and $6,500 federal homebuyer tax credit, one would have expected the Mortgage Applications Index (see to right) to improve as well. But it hasn't. Most significantly, the number of applications for new purchase money home loans actually declined in the week ending April 9 by 10.5%.

An upward spike in mortgage applications, of course, would signify that more homes are under contract for purchase, of course. (A homebuyer's purchase contract has to be signed by April 30 if the purchase is to qualify for the tax credit.) Surely there is a tipping point, where the good news in the economy motivates homebuyers to act. Not even the end of the homebuyer tax credit is creating that tipping point right now, though. Hopefully, a firming recovery will soon lead to increased home sales, though this economy offers no guarantees.

I feel that when a buyer incentive leaves the market.....the seller will continue to drop their price so as to make the sale since there will be less buyers. Surely one can't believe that this will BENEFIT sellers!! I also agree that sooner or later the government must leave the market to its own volition and let the chips drop where they may. I am relatively new to this(Oct 2007) so "normal" to me is like crazy. WHAT'S NORMAL?

Specific to Orlando - At $200k and below the market will crash for the 60-90 days (after 4/30) then when prices drop in the the $8k range buyers will get back in. 

Hi Rob, as we all know, this is quite a topic with varying opinions.

I tend to think that there may be a slow down, however, a couple large factors will be in play:

1.) All markets are local so I will refer to my market in NW minneapolis.  Prices are still vary attractive due to the saturation of listings.  Once the the tax credit expires, listing inventory will still be high.  This will have a significant impact on pricing.  Pricing will still stay attractive enough for buyers to buy.

2.) Secondly, rates at this point are still low.  With predictions from many experts, the rates are expected to increase steadily throughout the year.  This will keep affordability at all time highs (low prices and low rates simotaneously). 

There will likely be a slow down, however, there will still be plenty of business to go around for those that treat this as their career.

I agree with many of the folks posting comments.  I would prefer that the government do less to affect the immediate market for real estate sales.  The less artificial variables that I have to contend with the less difficult it is for me to plan my business strategies in the short term.  Just my humble opinion.

In the Denver area, I have witnessed many behaviors lately and I can't draw any conclusions.  More showings, less showings, successful price markups of 20%, properties sitting on the market at lower than market price.  These are all based on well done fix and flips - some of which are mine, some are not. 

Rosemary Meyer (Realty Executives of Kansas City) - Post number 12.

Unfortunately, this will happen.  If a person needs the incentive to purchase, he can't afford it.

Let it expire and let the market work.  If the government wants to do something that will help, address the foreclosures... for real.  Remember the cash for clunkers.  That was a real clunker.

While no one really knows what will happen April 30th, there may be some things we can do be prepare.  Check this out.. http://www.marketleader.com/blog/2010/04/22/6-ways-to-prepare-for-the-home-buyer-tax-credit-deadline/

I am hoping/wanting the market to stabilize and the only way it seems to me is to get rid of these subsidies and let the true bottom occur. I also believe we have either reached or are close to that bottom as the Markets seem oblivious to the machinnations of our gang of 453 and the one seem not to be affecting it as they were. Yes in spite of the tarp/auto/health/etc take overs by the one, the markets seem to be coming out of the morass. Housing is giving an inkling it is as well. With out subsidy perhaps we will see a true adjustment and can get on with the program. The prices will adjust down as will the values and hopefully hold, and start to adjust to reality.

It is going to still be a tough year/s but the gut is telling me perhaps we now have a chance.

HUD/Ssale/REO seems to be the next years game. With some traditional interspersed.

The greater Tampa Bay area has been terribly hit by declining prices these past three years.  Sales have increased this year and prices seem to have stabilized (especially for modest priced single family homes in reasonably good neighborhoods).  However, much of this has been due to the interest of folks seeking the first time homebuyers tax credit.  Unfortunately, there is so much inventory,, much of it "shadow" foreclosures and REO's that I'm reluctant to place too many hopes on things continuing so well after the tax credit expires.

Not incidentally, the majority of my existing contracts pending are short sales that were signed as much as three months ago.  In most cases, the buyers are depending on the tax credit.  If we don't get third party approval (e.g. mostly the big banks)so the contracts close by the end of June, a lot of deals will fall out.  I hope a lost of other realtors will join me in phoning congressmen, senators, (202/224-3121 for Congress) and the White House comment line (202/456-1111) suggesting that the Treasury Dept. must put more pressure on the banks to give timely responses to these pending short sales.  Otherwise, many more deals in populous areas (Fl, CA, NV, AZ etc) of heavy real estate distress will not go through and we will have even more foreclosures.

I have two closings scheduled for this last week in April.  Both are first time home buyers looking forward to the tax credit. It is an incentive as it either replenishes savings or provides extra cash for new expenses from window coverings to furniture purchases.  I was working with two fist fulls of buyers but unfortunately they were credit worthy and cash poor and unable to bring enough money to the table to cover their FHA down payment even with seller assistance on closing costs.  For most it will take months to accumulate that cash and for them I hope there is another incentive like lower interest rates or tax break but it does not seem likely.  I was mystified at the April 30 deadline in the first place as most families make a relocation decision after the school year. It would have been nice if the June 30 deadline included being under contract as well.

I have two closings scheduled for this last week in April.  Both are first time home buyers looking forward to the tax credit. It is an incentive as it either replenishes savings or provides extra cash for new expenses from window coverings to furniture purchases.  I was working with two fist fulls of buyers but unfortunately they were credit worthy and cash poor and unable to bring enough money to the table to cover their FHA down payment even with seller assistance on closing costs.  For most it will take months to accumulate that cash and for them I hope there is another incentive like lower interest rates or tax break but it does not seem likely.  I was mystified at the April 30 deadline in the first place as most families make a relocation decision after the school year. It would have been nice if the June 30 deadline included being under contract as well.

Tax credit, lower interest rates, and feeling better about the economy has helped our markets. I hope it continues especially with increased  trust in the economy.

"Mad Rush" is right.  Alabama buyers are jumping through hoops to get a contract before the deadline.  I am completely undecided about an extension.  My thoughts are to not extend for now and possibly later come up with another credit to start later.  Take a breather...  But it is definitely working for me right now. 

Thanks!

The tax credit is a great incentive for first time buyers, but what we really need is a steady pool of willing, credit-worthy buyers with decent downpayments. The real incentive should be homeownership and building equity.

I think the market has almost reached it's low point, and those sellers who embrace this new economic reality will fair okay since they'll be smart enough to price low enough to sell. 

I think we will need to change our buyer-pool focus. First timers without downpayments will run toward new home communities since builders often defray many sizable costs. Retirees may be a good focus (for both listings and buyers), and you always have folks following employment or good school districts.

I expect things will get tougher, not easier, and I'm already rethinking my strategy to gain new business. End of story: sellers are going to have to understand the rules have changed, and buyers are going to have to stop expecting freebies.   

In Palm Beach County Florida, there has been a mad rush for many people who want to take advantage of the tax credit. It is like we have been in a time warp and back to the Bubble days. Multiple offers (10 - 14/property) and bidding wars on non-short sale properties that are value-priced. Initially I thought the tax credit may be extended because of the continued slow response from banks on short sales but I guess that won't happen (not that I want it to anyway).