Is There an Advantage to Buying After the April 30 Deadline?

By
Real Estate Broker/Owner with J. Philip Faranda (J. Philip R.E. LLC) Westchester County NY

I have blogged before that the stimulus package, set to expire April 30, has fulfilled it's purpose. Sales in Westchester for the first quarter of 2010 have dwarfed those of the 2009 first quarter. This may seem hard to believe, but that $8000 tax credit is now over a year old. The Westchester County housing market, good or bad, has been reflective of this law for quite a while. With no substantive efforts I know of to extend the credit, after May 1 Westchester will have a more organic market with which to either put up or shut up. 

So what will happen May 1st? Will buyers give up, now that the tax credit will be gone? Will Westchester sellers get more motivated now that a small piece of leverage they enjoyed will be gone? 

Yes and yes. It will remain a buyer's market. Here is what I think will happen after April 30, 2010. 

  • Every house will lose $8,000 worth of value. Poof. Buyers will try to compensate for the loss of the credit by negotiating lower prices. Sellers will have little choice but acquiesce if they want to move. 
  • Sellers will get more motivated, and in many cases, desperate. Because of the perception that buyers have less reason to act, sellers will try and create their own incentives by lowering prices, being more negotiable, and doing more to make the deal work. 
  • Smart buyers will exploit a more pensive seller population to their advantage. Think of it this way: after "cash for clunkers" disappeared, crickets began to chirp again in the auto industry. Buyers who bought afterward had a captive audience at the dealership. The same will happen in housing. 

For better or worse, the buyer herd will thin on May 1st. Fewer buyers will yield fewer showings, fewer offers, and fewer deals. New listings to the market will be priced more aggressively. People who have to sell will cut as low as they can go and then some. The buyers who remain in the market will likely strengthen the upper hand they have already possessed for the past few years. it will mean more than the seller throwing in the garden set or snow blower.  The market will try to compensate for what the government takes away and smart buyers will take advantage. I welcome crystal balls and differing opinions.  

I don't know whether to tell you to buckle your seatbelt or tighten your belt. 

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Topic:
Real Estate Market Trends
Groups:
I Love NY
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LATE NIGHT - EARLY MORNING AT ACTIVERAIN
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The Ninety-ninth Percentile
Tags:
westchester county real estate
8000 tax credit

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Rainmaker
1,842,149
Gita Bantwal
REALTOR,ABR,CRS,SRES,GRI - Bucks County & Philadel
RE/MAX Centre Realtors

Maybe the price may go down but the buyer will not benefit because offering $8000 less on a house does not get the buyer $8000 cash in his hand to spend on things. It is something like how seller credit works and the loan will be less per month by a very small amount. 

April 04, 2010 06:05 AM
Rainmaker
384,190
Catherine "Cathy" Chaudemanche- Edison
Real Estate & Middlesex County in NJ
Metuchen Keller Williams Elite Realty / Middlesex County, NJ

"I don't know whether to tell you to buckle your seatbelt or tighten your belt."

I feel the same , I think the rest of the year will really tell where we stand in term of real estate recovery...

April 04, 2010 06:08 AM
Rainmaker
305,803
William True
Sarasota Real Estate
True Sarasota Real Estate

As everyone knows, real estate is local. It's hard to put all the eggs in one basket for comparison sake.

April 04, 2010 06:27 AM
Rainmaker
1,931,698
Barbara Todaro
"New Franklin MA Homes"
RE/MAX Executive Realty

I think you hit that one squarely on the head.....gather whatever you can this month, it will not be a pretty sight in the future.

April 04, 2010 06:31 AM
Rainmaker
96,163
Sam White
Brand Manager, Realtor - Bryan College Station, Tx
Zweiacker & Associates

Good job of being progressive, reading the market and looking forward to what comes next. Have a great Sunday!

April 04, 2010 08:45 AM
Rainmaker
1,248,786
Carla Muss-Jacobs, Principal Broker/Owner
Buyer Focused ~ Buyer Results
BuyersAgentPortland.com | (503) 810-7192 Portland Metro Exclusive Buyers Agent | 100% Buyer Representation ~ 100% of the Time

I'd rather try to negotiate seller concessions, if possible.  As Gita #1 suggests, a reduction in price (unless a cash buyer) really doesn't bring them hard dollars.  We'll just have to see on what will happen.  My market has been very slow for quite some time . . .

April 04, 2010 03:15 PM
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Rainmaker
818,627

J. Philip Faranda

Broker-Owner
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