While news continues to come in about the real estate industry, most reports suggest the market is still sluggish and the soon to expire $8,000 First-Time Homebuyers Tax Credit is affecting how buyers are acting. Without a clear direction of what Congress will pass in the way of a new tax credit, if at all, potential buyers are left watching and waiting.
The need for the extension of the Tax Credit, and the possible expansion to include all buyers and not just first-timers, is imperative. There is also a proposal to increase the amount to $15,000 from the current $8,000. Higher-priced homes have generally seen fewer potential buyers because most of these do not qualify for the tax credit. Most experts agree that some sort of bill needs to be implemented to keep the housing market moving.
While traffic and overall home sales have increased in the past year for most of the Chicago area, prices have taken a huge hit compared to a year ago. Home sales unexpectedly rose slightly in Chicago for August, but the mean and median prices have continued to slide for the year as a whole.
The large number of short sales and foreclosures have significantly hurt the sales prices in the area. Sellers that are having to sell short of their owed mortgage amount, and others who are just trying to avoid falling into short sale and foreclosure situations are essentially selling their homes below market value. This affects the prices of all homes for sale, and is relevant to anyone trying to sell their home.
What real estate professionals will be watching closely in the coming weeks is whether or not the new tax credit is passed, and if the credit is increased or remains the same. Higher-priced homeowners must also hope the tax credit boundaries will be extended to include all buyers, and not just first-timers.
The fall and winter months are usually slow in the Chicago area, so this is an important moment for all current homesellers. No tax credit extension could mean an even longer winter than usual around here.