As we countdown to the expiration of the $8000 first-time buyer tax credit, the question everyone seems to be asking is “are we going to see the credit again?”  As I was speaking with a seller tonight, it was one of the questions he wanted to ask, and I’d bet at least once a day for the last few weeks has someone stopped me to ask whether I’ve heard that the first-time buyer tax credit will or will not be extended.

I’ve just gotten off the phone with the Obama administration, and I’m pleased to announce … that I don’t know.  A fortune teller would be just as qualified as any of the rest of us, at this point.  And I don’t mean to make light of the situation, either, it’s just that no one can say with any certainty about what’s going to happen, and so we’re just gazing into our crystal balls, waiting for the sign. But here’s what I DO know:

• the credit has had an impact, both locally, regionally and nationally.  And buyers are reporting that they’re already seeing their credit check – one client, who closed in July, told me in August they had received their check and put in new kitchen countertops already.
• mortgage rates are still VERY low, as lenders continue to offer incentives to buyers.  I saw a 30-year fixed rate today at 4.85%, and local lenders are offering competitive rates with low fees.
• existing home sales rose again in July, making that the fourth straight month we’ve seen that since 2004.  This was driven in part by foreclosures being taken off the market, but that’s still inventory that’s being taken off the shelf and put back into play.

And here’s what I think will happen:

• in my opinion, we’ll see the credit returned, in at least a revised form, and soon after the November 30th deadline.  It can’t be argued that the tax credit has had an impact – according to the IRS, that bastion of transparency, 1.4 million individuals have taken advantage of the tax credit, and somewhere I read as many as 350000 homes purchased year to date used the credit.  350000 homes, 1.4 million individual … I don’t know how the numbers add up, but there you go folks.

So when I look at my own crystal ball, I see a new revised – and far-reaching – credit being installed shortly after the November 30th expiration; I just don’t think that the administration will ignore the increased pace of the housing market in 2009 since the tax credit was announced.  Sure, nationally there are still pockets of problems, and I think we’ll see more to come, but housing will not lead this recovery anyway, I don’t think – it’s just one component of a much larger economic engine.  Jobs seem to be where all the attention’s being focused right now, so if I had to bet I’d say that employment will be the driver on this recovery bus.

I know that many people disagree saying that the tax credit further taxes an already exploding budget, and that it boosts sales but not the economy.  Calculated Risk is one of those, and they’ve got some uber-smart people … I see that, I really do, it’s just that we won’t know the true impact of the credit long-term for years to come, when we know whether or not people were able to hold on to their homes despite job losses and rising costs (health care, anyone?).  In the short-term, and foreseeable future, the credit looks to have pumped consumer money – not government funds – back into banks, and taken housing inventory off the market.

That’s a win, in my book.  It’s a rock and a hard place when you consider how much our government is spending on all kinds of initiatives, but improved consumer confidence in one sector will begin to improve consumer confidence in other sectors.  What do you think – have we improved the housing situation, or made it worse?

Thanks for the photos.