The Power of a Tax Credit Near Expiration

The Power of a Tax Credit Near Expiration

$8,000 is a powerful incentive for home buyers who are buying their first home, especially when half of the homes in the country are trading at below $172,000. Visit www.TheLaJollaLife.com for more info

However, we are also a nation of procrastinators, so the tax credit is really only effective as it nears expiration. We saw this with the new home tax credit in California last Spring and we saw it with the national tax credit last Fall. Note the spike in existing home sales in October and November in the chart below. The existing home data is actually closing data, so most of these contracts were entered into in August September.

I see a large "W" shaped sales volume curve forming, with a huge decline when the December and January data is released, and a potentially even larger spike in May and June, with the new tax credit available to all buyers instead of just entry-level buyers.

Source_ John Burns Real Estate Consulting

Posted via email from Justin Brennan's posterous