And now that it's over...

>> 9.20.2010

(Source: Cottage Living)

The $8,000 home buyer tax credit was a great thing while it lasted...
homes were selling and first-time home buyers were pocketing $8,000
...but were they really saving $8,000 off of the price of a house?

Remember that neighbor of mine who had his house up for sale? Well, four months later and it's still on the market with fewer offers than ever. At the time, they received multiple offers at asking price (one of which fell through a week before the tax credit ended), but they've been stuck without buyers since. Since then, they've actually dropped their listing price by about the price of the tax credit!

(Source: Cottage Living)

I realize that the credit allowed many first-timers with little cash savings to buy a home that they couldn't otherwise afford to put a downpayment on (time will tell if it was a good thing), but if they had just waited out the credit, they might have found the same homes with reduced prices to make up for the difference. In reality, $8,000 savings off of a mortgage payment is a much larger savings over 30 years.

I'm curious to find out how homes are doing in your area. How much have you seen home prices drop since the tax credit ended?

15 comments:

Nancy September 20, 2010 at 10:16 AM  

maybe the home prices dropped but most, if not all, of the quality homes were fast on the market. I checked out a few homes after I bought mine and there is a reason why some homes were not snatched up with the credit.

Danielle and Clint September 20, 2010 at 10:35 AM  

A friend of mine bought during the tax credit and received it. That was really the only reason they bought right away. They call the house they are in their 5 year plan. I chuckle when I hear that.

Homes in my neighborhood, including my own, have dropped by 20,000-30,000. When I bought my home, I bought it to live in forever. So I am not too concerned about the value at the moment. I just try to make sure we are not doing too much too quickly to the home.

Amanda September 20, 2010 at 11:14 AM  

I haven't actually looked, but I'm almost positive prices in my area have dropped quite a bit since the credit ended. The funny thing is, $8000 isn't really all that much. I mean, for a young person like me, it's actually a TON of money, but when you buy a house that needs any work at all (let alone all the massive repairs mine needed) that money dries up quicker than a toad on July asphalt. There have been debates about whether the credit meant that people who "shouldn't" be buying homes were, when they didn't really know how to maintain a house or the big financial responsibility that comes with one.

Like Danielle, I try not to be affected by what home values are doing around me, because I didn't buy with the attention to sell anytime soon. As long as I can pay my mortgage and keep things running around here, I should be fine to wait to sell until the economy kicks it up a notch- whether that's five, ten, or fifteen years away.

Kate@TwentySixToLife September 20, 2010 at 11:36 AM  

I'm too scared to really analyze home prices in my area that way. Thank goodness we're planning on staying put for awhile!

Nina Patricia @ The Adventures of Nina Patricia September 20, 2010 at 2:07 PM  

scary tale: My Sister bought her house in 2006 for $220K...right now they are three houses in her neighboor selling for $155K, $145, and one for...$120K CRAZY!. Granted, looks like the cheapest one has been destroyed by the previous owners but still, that is devaluating the prices in that area BIG time.

Jeannine @ Small and Chic September 20, 2010 at 3:13 PM  

What funny timing! I found a house I love, but was totally floored by the price...it was actually REASONABLE! That was a few weeks ago. The price just dropped by $14K. It's empty and someone is obviously eager to move it. There's a short sale just a few blocks from that home that's about $30K less...it was owned by the builder and never had an inhabitant. Those are not normal, but I hope they are the start of something around here...

There's a local real estate blog that is at times hilarious and at times scary. It talks about the bubble in Charlottesville and how people refuse to price their homes realistically. Another local real estate blogger pointed out that many real estate associations try to fluff the market by saying homes are going for 90% of asking...but don't factor in price reductions and relistings.

I'm in a tizzy over all the information. I wish we could buy right now, but I'm not ready. For now, we'll wait and see. Marc and I made a deal that if that lovely house drops another $25K (unlikely) we'll find a way to make it happen.

Kasey at Thrifty Little Blog September 20, 2010 at 3:23 PM  

@Jeannine~ I'm dying to scoop up one of the reasonably priced homes in my dream neighborhoods, but we're just not there yet with our savings :(. There's no telling how long the slump will last, but I'm hoping that we'll be able to get a great deal in 2-3 years when we buy. I'm also planning on saving the cash so that we don't have to sell the home we're in now- it will rent for more than it takes to keep up.

Kim @ NewlyWoodwards September 20, 2010 at 7:37 PM  

I'm amazed by all these contacts. So scary, but not what we've noticed here at all.

We've bought 3 foreclosures in the past 3 years, and so far we're well ahead. 3 houses on our block have sold way above where we planned to be selling. This is one of the main reasons we bought a new house, to sell this one now, pay off our mortgages and loans and live debt free for the time being.

With that said, I think our market in the middle of the country is different. There's certainly been some changes, but prices seem to be bouncing back, despite the end of the credit. Two houses on our street have sold since it's end. However, I have to also lend this to quality - great houses will continue to go quickly, in my opinion.

-Kasey September 21, 2010 at 3:30 PM  

Fortunately for us we decided to start looking for a home to buy before the tax credit was to end. We found a 50's ranch home in a GREAT neighborhood that had been completely renovated [they were finishing up when we went to look at it], LARGE fenced in backyard and LARGE in ground swimming pool. The asking price was 169K... compared to 3 other homes in our neighborhood that were for sale, we jumped on it, offered full price and were moved in within a month... 8K tax credit now sits in the bank.

I have been keeping an eye on homes in our neck of the woods and honestly, maybe it's just the market in our area but they are selling fast! We had one go up for sale 3 houses down from us. I checked it online and the inside was completely outdated [think 80's style] and they were asking 275K for it! That's more than 100K more than what we bought ours at... the house was only on the market for 3 weeks and sold. Needless to say, since the tax credit has ended, it, overall, has not affected the price of homes in our area.

Livinia Redlips September 21, 2010 at 3:44 PM  

Housing prices are holding steady in Seattle. And good homes are being snatched up in days...I bought my newest at 4 days on the market...another up the street sold in less than a week.

Mrs. Chic September 22, 2010 at 12:42 AM  

I havn't checked home prices latly...but last time they were on their way slowly backup. We live in Sac, CA where house prices were hit HARD, good for me I was able to buy a home, bad from people who owned homes. I'm not too concerned since we plan on living on our house for many years

LizzieBeth September 22, 2010 at 1:48 PM  

I've been watching the prices around my area, and some houses have knocked as much as $50,000 off their asking price!

JEGs and I were going to wait until the first of the year to start seriously looking, but at this rate, I don't think we can go wrong! It might even be worth paying the penalties to get out of our apartment early.

LB

Jenna Scott September 30, 2010 at 1:32 PM  

Homes in my area (las vegas) are the same. I bought a month before the tax credit ended and all prices are the exact same in my neighborhood!

k + b September 30, 2010 at 3:54 PM  

We bought our house during the tax credit... it wasn't the only way we could buy a home but was huge motivation. We put a downpayment on it with our own money... (the tax credit came months and months and months later.) Eventually it went towards the numerous remodels such as our kitchen that we otherwise would not have taken on without it.

Brooke Anna November 28, 2010 at 3:11 AM  

My brother and I own a 4 bedroom/1 bath mobile home in Louisiana (two additions including a screened in porch, dining room, master bedroom and the back addition including a bedroom and office.)Two years ago he was asking 50K for it, for this next go around I would be happy asking 30K. I live in Texas now, and my mother and step-father own a refurb company. They took my current home (3 bedroom/2 bath single) paying $1500 as is (we gutted it) I put about 4K in it. Apprasial is now at $18,900 with fenced in yard, and improvements. We did this right as the housing crisis took place. What better time?! There's no way we could have a starter home for $5500 or even rent an apartment for that in a year. I want a new home when I begin teaching, but I'm happy to not have a house note for now till we both have an income :)

If I can sell the house in Louisiana, we might be getting a house sooner than later! Or maybe a new vehicle? (Though I'd rather a new home than a new ride:/)

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