Early Impact Of First Time Home Buyer Tax Credit Appears Strong

by Rich Vetstein on May 2, 2010 · 1 comment

in Massachusetts Property Values, Realtors, Tax Credit

The deadline for getting under contract for the First Time Home Buyer Tax Credit was last Friday, and some preliminary statistics are already coming out demonstrating how popular the program was.

  • The Boston Herald reports that almost 30,000 Massachusetts buyers have taken advantage of the credit already, and that doesn’t include the most recent weeks of frenzied activity in April.
  • The National Association of Realtors estimates that 4.4 million Americans will ultimately receive tax credits. That includes 900,000 buyers that NAR projects wouldn’t have purchased homes otherwise.
  • Massachusetts sales of single-family homes for March leading up to the credit were up about 28% over last March — the largest March year-over-year increase on record. Once the statistics for April come out, we should see some very strong numbers. Realtors were reporting very heavy activity last week, leading up to the tax credit deadline. This week was our busiest of 2010, by far, for new purchases.

The Other Foot…

But…all good things must come to the end, and the biggest question looms. How will the real estate market fair in a post-tax credit world? One school of thought is that the tax credit created an artificial demand which will ultimately hurt the natural equilibrium of the market. Others believe that the stimulus was just what the doctor ordered, and expect the housing market to stay strong and on track. It’s probably going to be a bit of both, and the proof will be after the data comes in through June 30 when all tax credit sale must close.

Congratulations to all those new home buyers who were able to find a home! Lastly, I believe that folks who buy in 2010 can claim the credit on their 2009 returns by amending their 2009 return. Click here for the IRS website. Talk to your CPA for more guidance.

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