www.lasvegasmtg.com Report: Once again rumors of $8,000 tax credit renewal is being reported in the business section of the New York Times March 29th, 2010 written by David Streitfeld. The article outlines what everyone knows in the Real Estate profession that December sales data was the worst on record in 40 years with a drop of 23% of existing home sales over the previous month. January and February sales data were not much better with a modest increase in sales for March being reported.
The decline in the sales could be directly linked to the bad weather that has hit most of the country and the pickup of recent sales activity could also be attributed to the $8,000 tax credit repeal that will take affect if not under contract by the end of April. The article correctly states that there was a rush to be under contract the first time the $8,000 tax credit was set to expire, the same trend seems to be repeating itself again.
The article reported that while the $8,000.00 tax credit helped stabilize the falling demand for housing in 2007 and 2008 that it did very little to stabilize the prices of homes around the country. Several economists believe that if there is a rush to be under contract before Aprils deadline that this will not bode well for the future of homes sales without a tax credit. Most economists believe the $8,000.00 tax credit created an illusion of demand for housing and hid the real weakness in the housing market.
The fear that if the $8,000.00 tax credit is allowed to expire we will see the housing market collapse, is also reflected with several states providing their own form of housing tax credit even while those same states are facing their own budgetary shortfalls.
The question now is not if they extend the $8,000.00 tax credit, but how will they end it without killing the patient it is meant to save?