First-time buyers have been driving the market in Chicago for months. They are taking advantage of both the low prices and the nearly record breaking interest rates available to them. First-time buyers are also helping the market by buying homes from sellers wanting to also take advantage of the market by buying something larger. In my experience, this is typically the beginning of a larger market improvement.
For Most the Tax Credit is a Bonus, Not Reason to Buy
The $8,000 first-time buyer tax credit has been a nice bonus for many of these buyers. I haven’t seen evidence that the tax credit was the driving force for first-time buyers in Chicago; they look at it more like an added bonus to the already low prices and interest rates. It has helped push a few on the edge of the decision to buy or rent to move toward buying, but overall it has not been a tremendous influence on people’s decision to buy.
The number of first-time buyers has been strong over the last three months. Multiple offers (have not said that in a while!) have been taking place on well-priced homes that appeal to first-time buyers. The trend looks like it will continue, especially with many flexible first-time buyers taking advantage of short-sale opportunities.
The deadline for the first-time buyers tax credit is fast-approaching: you must close by November 30 and most closings are now taking much longer?perhaps averaging 60 days. Because of this timer constraint, I expect some will act a little more quickly now. However, it will most likely not have a large impact either way.
Nice If Extended, but Not Necessary
It will, of course, be better if it is extended but should not have a tremendous effect if it is not. The tremendous supply of places for sale in the Chicago area, aggressive pricing by some sellers, and low interest rates will be much more important. But, hey, throwing money at somebody will never hurt.