The Federal Home Buyers' Tax Credit was designed to create a domino effect that would inject life into the housing market. The tax credit was meant to encourage home buyers to act on their dream and home sellers would reap the benefits. Of course, the overall idea was to buoy up the economy.
The plan worked to a degree. Yet even with the Home Buyers' Tax Credit in place, every home seller did not find a buyer for their property. With the recent expiration of the tax credit initiative, it seems that there might be more challenges around the corner. What does the future hold for home buyers and sellers?
Home Sellers
Regardless of the economy, selling a home is a big step. The seller has to be prepared for a few challenges. Selling a home requires commitment, effort, and compromise.
When some home owners could not sell their homes – even in the Home Buyers' Tax Credit period – they took the matter into their own hands. The owners invited everyone around for a 'house selling party' and offered an $8,000 reduction in the price of their home. In other words, they created their own personal 'home buyer tax credit' that would work for them and the lucky buyer.
No doubt, most would classify this action as an 'incentive' and it is – an incentive of the legal variety. There is no law against dropping the price of a home. Of course, if the buyer had been willing and able to contribute that $8000, it would mean a much sweeter deal for the sellers.
Today's home buyer, however, is a sophisticated type who knows the score. With the latest technology used in real estate and countless virtual resources at their fingertips, buyers understand the market better than ever before. They know in detail about the properties for sale, purchase prices, and the trends in sales.
The modern buyer will not be impressed by gimmicks but they will react to a lower price. In an economic downturn, home sellers have to consider that possibility. Sometimes lowering the price is the only solution for a quick sale. Maybe more home buyers will have to take the 'rebate replacement' approach.
Home Buyers
The Federal Home Buyers' Tax Credit encouraged some interested parties to take that final step towards owning a home. We must hope that they did not make that decision based solely on the existence of the tax credit. Buying a home carries with it a long-term mortgage, maintenance costs, and property insurance, as well as other expenses. Home ownership involves taking on a financial commitment far greater than $8000.
If any home buyers were jumping into the market because of this tax credit, we should be glad that the program has reached its end. Home sales based on a tax credit have no foundation and the set-up will crumble in the future. Individuals should not take on the major commitment of a home purchase without being prepared on every level. Post-Federal Home Buyers' Tax Credit, responsible buyers will still purchase a home at some point – maybe a cheaper home or maybe at a later date. If people were planning to buy a home for the tax credit, the end of the program is a blessing in disguise for them.
Do You Think Home Sellers Will Be Forced To Reduce Prices Following The End Of The Home Buyers' Tax Credit?