This winter may be more spring-like when it comes to home sales. (Photo: iStockphoto)
Just to prove how topsy-turvy the real estate market has become, what used to be a no-no is now a must-do.
Consider selling a home. Nobody but the desperate tried to sell a home in the winter. Now, some are saying that’s exactly what you should consider. The reason is that the $8,000 first-time buyers’ tax credit and $6,500 incentive for existing homeowners will expire April 30.
Proponents and critics of the tax credit both agree that the program has increased the number of sales and even pushed prices up modestly. But the free fall home sales took during the lag time between when the credit was extended and expanded after the original Nov. 30 deadline has both sides concerned about the market's reaction when the government programs end.
Originally, for buyers to take advantage of the tax credit, they had to purchase a home by late October to close before the deadline. November was a telling month because it was not certain if or when the credit would continue.
Pending home sales dropped 16 percent, startling even those who have been bullish on the real estate recovery. Critics pointed out their concern that the tax credit is creating a false bottom for the market, one that could be quite deep when the program ends.
Extension for tax credit?
Of course, I think there’s a good chance the government will extend the credit again if it thinks removing the incentive will cause real estate to plunge. Surely, the sales results for November were cause for concern in the Obama Administration.
The plan was to have the tax credit get the housing market over the winter hump and create momentum heading into spring and summer, which traditionally are the biggest seasons for home sales. I can’t see the program ending without at least some form of tapering unless the unemployment rate shows significant improvement by the end of the first quarter.
Until then, expect to see sales warm in those cold winter months.
“This year, we’re anticipating sales will peak earlier,” Nicole Hall, editor in chief of Lendingtree.com, told Forbes. “The best time to get your house on the market will be February or early March, and maybe even earlier if you want to avoid competition.”
Welcome to the new market, where upside down is now right-side up.—Rick Hazeltine