In 2009, Snohomish County seen a surge in the real estate market place with sales increasing and in some cases home sold prices rising. I use the term home sold prices versus increasing value because the prices where inadvertently driven up due the home buyer tax credit stimulus. The demand for homes has increased due to a high sense of urgency of the November 30th tax credit deadline and not due to healthy economy.
Now home buyers across the nation are probably asking themselves the questions: Will the home buyer tax credit be extended? Will the home buyer tax credit be increased? Will the home buyer tax credit back fire on the economy if it is kept or let go?
Charles Richey, at the Examiner, touches on a topic that may have the government rethinking any home buyer tax credit, home buyer tax credit fraud. Fraud could halt any extensions to current programs and/or the development of new programs, which are trying to be increased to a whopping $15,000 tax credit by John Isakson.
There also has better chatter “if” the tax credit should even being extended, Jay Thompson is still formulating his position. Others are pretty adamant about not extending the tax credit, just take a look at the opening comments.
But what happens to the economy after November 30, 2009 when the tax credit stimulus is scheduled to end?
I think markets will see an immediate retraction with home sales slowing and eventually returning to 2008 numbers. Markets like Snohomish County that are missing some key economics factors, like jobs and consumer confidence, will be hit the hardest and that is why I am for continuing the tax credit.
Here are my top 3 reasons why the tax credit should be continued, modified, and extended (is a *change of opinion* disclaimer needed here?).
1. The tax credit will help move the economy forward after the New Year by providing positive motivation to purchase
2. The tax credit’s benefits will spill over to other industries that depend on a healthy housing market
3. Smaller markets will take long to recover than major markets
The last item is the most important in my opinion and is a topic not touched on in a recent Bloomberg.com article. The ending of the tax credit could have ramifications on smaller and recovering markets, like Snohomish County, that could stall or reverse any recovery these areas have seen. The Snohomish County market is no different than the many others that depend on strong employment to maintain growth and consumer confidence.
At the moment neither of those two items are not strong in our area. So forgive me if I disagree with Kase to phase back incentives because 20 cities across the United States are seeing an increase in housing values.
“We’ve got to phase back incentives and this may be a good time to do that” – Karl Kase”
Allow for a little more time to for consumer confidence to return and employment stabilize prior to calling it quits to a program only announced February 2009. The Snohomish County economy is not going to recover over night, nor with a one shot solution, and I think if the tax credit where to be extended another 6 months areas like Snohomish County would be stronger for it.
2 Comments
My name is Lacey and I live in Alabama. My fiance and I are trying to buy a house before the tax credit is over but we want to get 100% financing. In the great state of Alabama our USDA loans are behind by a month and we are about to put in a offer on a house and we wont be able to get the most affordable financing for us if the government doesn’t extend the 8 thousand tax credit that we need. We are hoping and praying that they will extend it!
Hi Lacey, I think a lot of people are hoping the tax credit will be extended because they are 1) ready to make an offer 2) or they will be ready after the first of the year. The announcement of the current tax credits where retro actively placed by the government so it wasn’t until the buyers purchased their home the announcement was made. I bet the eyes of the nation will be watching very close come the end of Nov.