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As I blogged about this summer; I didn't cash in my clunker when Uncle Sam was offering $4500 to trash it. Part of the reason was that the dealers weren't making many deals. I suspect many potential home buyers are experiencing a similar phenomenon. Realtors in the DC area tell me people who can qualify for the tax credit are in bidding wars with each other over lower priced properties in their reach. Some realtors are cautioning their buyers not to worry too much about the credit, but to focus on if the home is really what they want. Buyers should make sure they can live with the home for at least three years, a sale before then means the credit has to be paid back.
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Comments
A bidding war? Sounds like 2004-2006 but on a smaller scale. Home sales prices are again being artificially inflated by an outside influence. In those years it was cheap mortgage money and easy qualification; today it's a tax credit.
That's sound advice. I had decided on a home before the tax credit came around, it was just a convenient coincidence that I was eligible for it, so in my case the government paid out 8k for nothing. I don't feel guilty about it considering the tens of thousands I've paid in taxes over the last decade, though.