or Login to submit your own content and comments.

Articles : The Tax Credit is Over, Now What?

by David Reinholtz [16.62:1595] on 7-Sep-10 11:33am

Now that the tax credit for new homebuyers has come to an end, people from all walks of life, from potential homebuyers to mortgage brokers to real estate agents are asking the same question: now what? This isn't an easy answer to give for so many different realms of the industry and people. After all, few individuals predicted what was to transpire in 2008 and send the housing industry into its tailspin and even fewer predicted that the effects would be as lasting as they have been. Still, while there is no crystal ball that we can look into and get a solid handle on what the end of the tax credit will mean in the long run, we can take some control of what may, or may not, happen in the coming months and years.

The success of the tax credit?

One question that we should ask is whether or not the tax credit was actually a success or not. When we look at the millions of homeowners who took advantage of it and bought a new home during the program's run, the answer is an unequivocal yes. Without that influx of buyers who were motivated by the tax credit, we wouldn't have seen a stabilizing effect on housing prices or a willingness from all of those homebuyers to jump into the tepid waters in the first place. The 35th anniversary of the movie hit, 'Jaws' reminds us that what lurks in the deep, in the dark waters in which we can't see, can sometimes be dangerous. And this gave millions of people pause when considering buying a home this past year.

Some individuals and organizations will certainly crawl out of the woodwork in the coming months and years to claim that the tax credit didn't do enough or favored one type of homebuyer over another or didn't have a lasting impact on the housing market, and we'll let those opinions fly when they arrive. The discussion here is about what happens next.

Take control

Homeowners and potential homebuyers who have missed out on the tax credit opportunity will ask the most common question next: will it return? Unless you work within the White House Administration, then you don't know the answer to that question. Being honest and upfront with potential homebuyers is the best method to earn their trust. It shouldn't matter whether the tax credit will return, whether in the same form it was in before or in a new form or with different parameters and expectations or whatnot. What homebuyers need to accept and realize is that they should be taking full control of their future, without waiting on or relying on some other entity to help them achieve their goals.

The first step we should encourage these individuals and families to do is to set clear goals for their future. When people don't have clear and concise goals, when they don't quite know what they want, then they will be more inclined to wait. Playing the waiting game is one of the surest ways that people will miss out on their dreams. Waiting for something external to happen, whether it's a low interest rate that falls within a target percentage or holding out for a return of the tax credit program, for instance, can leave millions of would-be homeowners out in the dark looking in after the home prices rebound and end up paying more for their home than they would have gotten back from any credit or interest rate drop.

Another shred of advice we should offer clients is to pay attention to the market within their region. Keep track of what home prices are doing. They shouldn't rest on their laurels and wait for their realtor friend to call them and let them know that now is the right time to buy. It may be, but the right time could be tomorrow or next week; it could have been last month. Anyone who has an ambition to buy a home within the next year or so should pay attention to the market very closely and at all times.

For brokers, connect regularly

For brokers and agents, now is the time to reconnect with clients, and to maintain contact with them regularly to let them know of changes and what is happening right now. This doesn't mean harass or bombard them; it merely means to keep their attention fixed on buying a home in the near future. When they are reminded of their goals and desires, they will be more likely to act when they feel empowered with information.

So, to answer 'what's next,' it's simple: staying informed.

David