For those not in the real estate business or who don’t know a first-time buyer getting in line for a federal tax credit, there is a big push happening right now of people looking to make a purchase.
The deadline to get a property under contract and qualify is April 30, although prospective buyers have until June 30 to close. That April deadline seemed so far off last November when announced, but for many, it is looming.
If you are looking and haven’t found the right place yet, five weeks may just come a lot sooner than you think. Of the clients I’m working with, more than 75 percent qualify, and our searches are accelerating. We’re not frantic, not yet at least, but $6,500 to $8,000 is a lot to miss out on if you just can’t find the right place and miss by just a couple of weeks.
I know others are going through the same process, so I suspect the whole month of April will be a building crescendo of searches and offers. I bet I won’t have weekends off.
It has been easy for buyers to take their time since November, and I’m working with a few who thus far haven’t had a sense of urgency, but deadlines are deadlines, and I’m setting aside a lot of time for business in April.
Maybe I’ll vacation with my CPA friends as they do each May after tax season.
I‘ve been letting my clients know, gradually but with certainty, that it might not be the best idea to wait until the last minute to make a move. As April progresses and the pressure builds, I believe more and more properties will go under contract. More and more options will diminish, and first and second choices just might not be available any longer.
For many highly desirable properties – and I’ve already seen this with a number of foreclosures my clients have bid on – multiple offers are likely. And if last November’s deadline for the first tax credit is any indicator, sellers will become less and less willing to negotiate as they see more and more contracts take down their competing properties.
The upside of all of this – and the intention of the tax credit – is to get inventory moving, and it has worked and will continue to. That should help stabilize prices in many markets and sub-markets and be one more step toward the real estate market’s recovery.
The market has definitely picked up overall; everyone in my office and everyone I know in the business is hustling to keep up, and new clients keep calling, thanks to low prices, low interest rates and the tax incentives.
Each person looking really wants to find a great deal, and these days that isn’t nearly as tall an order to fill as it has been in the past.
I believe this will be sustained beyond the tax credit, priming the pump and getting people looking and buying again, agents busy again, and lenders comfortable with lending. The difficulties overall from just a year ago seem to be gone. I look forward to sales numbers being published this summer for the sales and contracts happening now. As I continue to place bets in this column, I think those numbers will be big.
Many think this is a bad time to ax the tax credit, while others say our struggling economy can’t continue to feed tax dollars into the real estate system.
I can say that I see and understand both sides of the argument.
I know I’ll be happy and adjust either way, as we all will.
I don’t believe that tax credits are the sole driver of this upswing, so they aren’t the only component that needs to remain. Keeping the lending spigot open is as, if not more, important. And making sure qualified buyers can buy will need to keep pace with demand. Interest rates remaining reasonably low also will be important.
I’ve watched as higher-end properties that almost seemed impossible to sell last year finally have moved. I’ve watched my clients begin to look in higher and higher price brackets, many who aren’t tax-credit qualified or motivated.
My hope is that the market finally begins to find some balance between supply and demand. I know some mini-markets that definitely have and others that are struggling as badly as they were the last couple of years.
I know I’ll continue to work through the highs and lows, but I think I do see some light at the end of this tunnel.
It’s still pretty faint, but it no longer is moving farther away, and each sale of each property is like one more footstep toward the end. I’m betting that April, May and June, because of the tax deadlines, will turn more into a jog than a slow crawl.