There has been much talk about the $8,000 first time home buyer tax credit. Many, including my own trade organization (NAR), say or at least infer that the tax credit has given the real estate industry closings that may not have occurred otherwise. But, is this really true?
There has definitely been a shift towards more purchases by first time buyers in the past year. But I wonder how much this has to do with attractive prices on homes for sale and attractive interest rates?
We are at 2006 price levels in the Raleigh real estate market right now. Maybe the buyers that have showed up to purchase their first home are just smart enough to realize that 3 year old prices in a relatively stable market like the Raleigh area are a good thing.
Maybe the first time buyers of late are smart enough to realize that mortgage rates between 5% and 5.5% may not be with us for much longer.
Maybe with home prices where they are, and mortgage rates as low as they are, first time buyers would have made the choice to purchase a home anyway.
I guess we will never really know because we cannot test or compare the same circumstances without the tax credit in place.
