Home Buyers Who Missed $8,000 First-Time Home Buyer/$6,500 Existing Home Buyer Tax Credit Coming Out Ahead!
Do you feel like the window of opportunity to purchase a home shut on the April 30th, the deadline to be in contract for eligibility for the home buyer tax credits? That window of opportunity might have closed but the current real estate climate has opened the door for new and often even greater opportunities for qualified home buyers:
Existing Homes: In some neighborhoods and price points, sellers are dropping their prices because buyers are harder to find now that the credit has expired. Home sales leapt in March and April during the waning weeks of the credit, especially for homes that appealed to first-time home buyers. Since the credit expired, home contracts and building permits have tapered off, leaving sellers with fewer buyers and, in some cases, little choice but to cut their price. According to real estate website Trulia.com, which tracks price reductions, 30% of homes for sale on May 1 had reduced their asking price—more than in April or March. Buyers hope they can take advantage.
New Construction: Those shopping for new homes are finding a different kind of bargain as some builders roll out incentives to keep traffic moving. After the credit expired, one home builder launched promotions for free finished basements and/or other upgrades. Other builders are offering free appliances, trade-in programs, rebates and “sweat-equity” discounts that allow a homeowner to drop the price by painting, landscaping or otherwise helping to finish their home. Any of these deals would be worth well above the $8,000 or $6,500 credit.
Interest Rates: This is a big one. Financial experts expected interest rates to have risen by now. They haven’t. Interest rates have dropped nearly half a point since the April 30th credit deadline. That means over the life of a loan, a homeowner could easily save more than the value of the credit over the life of the loan.
Translated into dollars and cents: Buyers of a $180,000 home who borrowed $173,700 in mid-April at an interest rate of 5.125% would have paid $377,442 over the next 30 years — $15,000 more than they would pay if they borrowed last week at an interest rate of 4.75%.
It’s not money in your pocket right away but the value of the interest rate today is really better than the tax credit in the long run.
The reality of the home buyer tax credit incentives is that it has cost all taxpayers $18.7 billion so far. The White Knight to bring us true recovery from the housing crisis will most likely be good old Supply and Demand. When Supply is higher than demand, prices become lower so they can compete in the market. Talk to an agent at Netter Real Estate 631-661-5100 today. You might be able to purchase more house than you originally thought possible and you will be helping all America to recover without costing taxpayers another dime.
