The spring buying season typically takes off in March and runs through May. But buyers who want to claim this year's tax credit — up to $8,000 for first-time buyers and up to $6,500 for repeat buyers — must have signed purchase contracts by April 30. And they have to complete the deal by June 30.
"I expect the buying season will be moved up," says Jim Gillespie, CEO of Coldwell Banker. Sales "are going to take off in February and March and really take off in April. ... My concern is that the move-up buyer hasn't thought what they need to do. Their window is really short. They have to coordinate closing dates."
The average time it takes to get a home loan processed is about eight weeks now — two weeks more than it used to be, according to the National Association of Realtors.
The tax credit's impact on 2010 home sales is uncertain. Some economists expect the credit to pull sales that would have occurred later in the year into the first half.
"The tax credit will absolutely have an effect," says Pete Flint, CEO of Trulia, a residential real estate search engine. "It is going to shift demand from the later part of the year to the first part. January and February will be very strong. The next three months, there will be a surge in demand."
The credit is pulling in some consumers now.
"I'm actually in the middle of house shopping, and I decided to do it now so that I could get the $8,000 tax credit," says Amity Gay, 26, who's looking for a cottage-style house in Tallahassee.
Sellers should be prepared to appeal to first-time home buyers, who still make up the majority of buyers, according to Pat Lashinsky, president and CEO of ZipRealty.
And buyers should expect rising prices in some markets, including San Diego, Dallas, Minneapolis, Chicago and Washington, D.C.
At MetLife Home Loans, buyers are being preapproved now for new housing developments; an increase in demand is being attributed to the expanded tax credit.
"Our spring market got moved up at least two months because of this," says Kent Geschwender, branch manager.
The tax credit was scheduled to expire on Dec. 1, 2009, but was extended and expanded by Congress.