This is where is gets interesting…like it hasn’t been already, right?
Now that the $8,000 first-time home buyer tax credit has been extended to loans that close by the end of June, 2010….and there has been an addition of a $6,500 credit for so-called “move-up buyers”-we wait to see what impact it will have on the housing market in the months ahead.
All along, some critics have argued that the tax credit was used mostly by people who were in en economic position to buy homes anyway and that it really didn’t bring a hell of a lot of people into the tent. And, the Obama administration was not all that keen about extending and expanding the program anyway.
One analyst worries–as do many others–that when the credit eventually does come to an end, and mortgage rates rise, any budding real estate market recovery will take a nose dive.
“…the fear is that rates are going to go up strongly, so a lot of people are trying to get in the door now before that happens,” argues Milessa Cohn of The Manhattan Mortgage Company.
But, she continues, “…once rates begin to go back up and we lose the tax credit, that’s going to slow the real estate market down again,” she told Reuters.
Of course, that is always the problem when the government –or anyone else for that matter–artifically inflates and supports a market: what happens when the air goes out of the balloon?
It may not be pretty. Remember the last story with a balloon?
Photo Credit: Cimexus