First-Time Buyers Running Out of Time
If you look at the types of homes that have been trading in Connecticut, it looks like first-time buyers have helped the market pick up a bit.
July home sales climbed 4 percent. But sales in the lower-end of the market — those that first-time buyers would most likely purchase – increased even more.
A total of 1,267 single-family homes priced between $200,000 and $400,000 sold in July 2009, up 6.4 percent from July 2008, according to The Warren Group.
Meanwhile, homes with $700,00-plus price tags plunged 30 percent in July compared to a year ago.
Local Realtors say that the $8,000 first-time homebuyer tax credit has helped boost home sales, and they’re urging federal leaders to extend it.
According to news reports, the Obama administration is currently weighing a proposal to extend the tax credit, which expires at the end of November.
The tax credit, coupled with lower prices, has been vital in bringing a flood of first-time buyers to the market, Realtors and experts say.
Incentives like this tax credit are effective because they have a deadline and create a sense of urgency. Prospective buyers, knowing that the tax credit is temporary and time is running out, are more likely to hurry and make a decision. If consumers know that lawmakers might extend the credit or even expand it, many may just take the wait and see approach – particularly if they’ve already put off home buying for a long time.
Anyway, it really doesn’t matter how much money the government throws at would-be buyers.
Consumers who have concerns about job security or those who’ve had their paychecks slashed aren’t in a position to make the biggest purchase of their lives.
Ultimately, the key to the long-term health of the housing market will be stronger employment numbers and business growth.