Home Buyer Tax Credit Expiring in 3, 2, 1…
It has been an exhausting month for the nation’s real estate agents: The prospect of an $8,000 tax credit sent buyers scrambling to seal deals before the offer expired, this time not to be extended. And it looks like it made a difference, with home sales up 27 percent in March nationwide.
“I told a whole bunch of friends, I’ll see you at the end of the month,” said Michael Kiefer of GreenDC Realty.
In D.C. at least, buyer behavior was not always logical. The District already offers an indefinite $5,000 credit, and you can’t get both, which means that your net gain for purchasing this month is really only $3,000. One realtor told Housing Complex that she’d even seen people bid up the price of a house higher than the amount of the credit, all in the interest of signing a contract before the deadline.
Rachel Valentino, who you all think is the best realtor in the city, says the credit generated a whole lot more prospective interest than actual sales. The house shoppers who were really incentivized by the credit later in the process, she says, ultimately couldn’t find the right house in time.
“It’s that initial shock and awe. They realized, there are so many benefits for doing it right now, why didn’t I get my butt into gear faster,” Valentino said. “Then quickly, I’d say within a week, they realized it was going to be impossible.”
The other problem was a mismatch in timing: A lot of houses came up for sale in the last couple of weeks, which is the traditional open house season. But the tax credit expired a bit too early for buyers to then close on those late-listing houses in time.
“I would have encouraged people to list earlier this year,” Valentino said. “This time of year really popular, but because of the expiration, I’ve been surprised that people didn’t try to give themselves extra time.”
We’ll take a look at the April numbers when they come out. Meanwhile, realtors of D.C., take a vacation.