Welcome to the tax credit vacuum!! We saw this coming months ago. Unfortunately, we are in it now. What I am talking about is the void of buyer activity we are currently experiencing due to the expiration of the homebuyer tax credit on April 30th. No one knows how long this is going to last, but the first-time homebuyer price range is the most affected. Here in Indy that is $200,000 and under. Homes priced above $400,000 are not doing badly and homes above $900,000 are seeing some of their best activity in years.
The sooner the unemployment rate retreats, the sooner we can set our sites on a long-term recovery. Banks and secondary markets are preparing to release their 'shadow inventor', which are the homes they own, but don't have on the market as they are waiting for the market to improve. Since they have seen signs of improvement, we are hearing that these distressed properties will be released soon, further depressing the market.
The good news is that interest rates have fallen again and as of Friday afternoon were around 4 5/8% for conventional and 4.5% for FHA with excellent credit.
Either way you look at it, it is a great time for buyers to get back in the market with inventory increasing, sellers getting frsutrated with lack of activity, and super-low interest rates, which, by the way could save you more money in the long-run than the tax credit with higher interest rates!
