Are Home Sales Rebounding Off the Tax Credit into Recovery?

It is no great surprise to anyone that the real estate market has been suffering some hard times for the past few years; real estate prices have been struggling to varying degrees since the market hit its peak in mid-06. The real estate market is one of the indicators of the state of the current recession and so the current upswing is quite possibly a bright light at the end of the dark fiscal tunnel.

The US home buying stimulus program was set up so that first time home buyers who are purchasing a home between January 1st and December 1st, 2009, can apply for 10% or up to $8000 in tax credits to assist them in their real estate purchasing. The program eligibility is based on the income of the home buyers and differs from the previous tax credit for first time home buyers in that it does not need to be repaid. This program differs from the previous year's tax credit program for first home buyers which was similar except that it was essentially an interest-free loan that eventually does need to be repaid.

The results that have been seen since this program was instilled so far have been fairly dramatic; housing prices have started to rise and it is estimated that up to 350 000 sales will take place during the period of January 1st to December 1st that would not otherwise have been made. The increase in sales is helping to support some higher real estate prices; for every home that's sold instead of being foreclosed on the value of the homes around it are supported as well.

There is one main problem for anyone who's trying to take advantage of the last few months of this program however because the December 1st deadline is when your sale must be closed. Normally the contract closing for a home sale takes about a month or six weeks to close, but with changes in mortgage lending restrictions and the mad dash to get homes bought in time for the close of this program. The smart money seems to predict that after the stimulus of this tax credit has finished the market may very well slow down again though not to the levels that we have seen previously.

It is quite likely that the number of foreclosures will continue to rise which causes their prices to drop as well as the values of homes around them, especially when foreclosed homes stand vacant. There may also be a rise in the supply of homes on the market as a result of the recent rise in home sales going on as home owners who are struggling to make their mortgage payments. The only thing for sure at this point is that the best way to ride this all out is to spend wisely and research your options before making major financial decisions.

Article Source: http://www.realestatepropertyarticles.com.

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