Are you better off buying in Virginia DC and MD AFTER the tax credit expires? Maybe.
Everywhere you turn (even CNN.com) you read about the $8,000 1st time homebuyer tax credit and how you need to “Buy Now” (anybody remember that NAR ad from 2006?). Gotta hurry up before the Dec 1st Expiration!
(Sidenote: that expiration means you need to CLOSE by then. If you are looking for a short sale gamble, and you want the credit, you better get it under contract NOW. And everyone else, don’t be an idiot and schedule your closing on the 1st. At least close a week early. There will be a backlog, and hiccups, and you might miss your tax credit.)
So Warren Buffet says whenever you see a herd running in one direction, you are supposed to walk the other way.
Well there IS a stampede in Virginia trying to buy homes in time for the Obama tax credit. People LOVE tax credits. Kinda like people love to “SAVE” by going FSBO, when it will likely actually NET them less.
Has anybody stopped to wonder whether this mad dash might be temporarily INFLATING prices beyond the credit that it offers? And the day after the credit expires, might there be stall? Winters are bad enough, maybe the worst winter recorded?
If you are buying under the $100,000 price point, sure that $8k credit will likely be better to take now.
If you are buying from $400k-$700k, you have to ask yourself, “Once the flood of buyers evaporates, won’t that send prices down?” Maybe.
Am I saying “DO NOT BUY?” No, but I am also saying, don’t be silly and getting into some crazy bidding war or overpay for a place to get in under the wire.
Kinda like the Cash For Clunkers campaign. How many “Deals” do you think the dealers were really giving in that last week when their phones were ringing off the hook? They probably jacked prices up. And sometimes that $5,000 credit was in place of a $3,000 valued car. So the net saving was only $2,000! And on a $20,000 car, I bet a month after the tax credit, (after inventory catches up) you can get that $20k car for well under $18k.
Don’t get too greedy! You also want to sell into this flurry. Ask for too much and watch the dead Winter-time come (unless Congress extends it, which they might).
Normally I am not an advocate of Market Timing. But for those that like to try and play the game, I just wanted to give you some food for thought.
Also please attach comments with links to any other blogs that might question the value of rushing in to get the tax credit (I didn’t see any, they were all “buy now”).
And stay tuned for a flurry of new posts. I had an 18 hour trip to Africa (see Wheel Estate Cam Below) to write a ton.
Written by Frank Borges LL0SA Broker FranklyRealty.com
New: Inman 2009 Innovator of the Year (more on this later)
Random Wheel Estate Cam video from Africa: