These last few months after the extension and expansion of the federal homebuyer tax credit program have been interesting.

Last fall I was in a panic because I had two closings that did not seem like they would make the deadline for the first-time homebuyer tax credit, but we got lucky and the deadline was extended. My buyers were relieved we had worked hard to beat the deadline.

This year it seems like the homebuyer credit just kind of sat out there and people did not get too interested in it until February or so. There was some activity in November that was left over from October but not a lot.

It could be because of the weather in these parts or maybe it was part of the general malaise about the economy.

This month has been very busy. I have literally had people call with a sense of urgency about buying a home. Unfortunately, none of my sellers have been eligible for the tax credit. My sellers have either not owned their homes long enough or have not lived in them long enough, or both.

Yet some of my sellers did benefit from the tax credit, as they got offers on their homes and they were not on the market for very long.

I am getting calls from people who should not be buying real estate — at least not in my humble opinion. The young man from out of state with the two-year internship here in the Twin Cities, for example.

He is convinced that it is better to buy than to rent, even if he plans on moving in two years. He isn’t taking my advice, so we are condo shopping.

In general, I am telling my clients that an $8,000 tax credit is not worth making a $150,000 to $350,000 mistake.

I tell them if they are ready to buy and if we can find the right house, they should do everything they can to take advantage of it. I know that isn’t what I am supposed to say, but I doubt I will ever change when it comes to telling it like it is — even if I lose business because of it. …CONTINUED

I watched our local housing sales numbers during the frenzy last fall. The inventory shrunk and the prices went up, and I think it was fueled by the tax credit. Some who took advantage of it may have ended up paying $8,000 more for a home. Prices have still not quite returned to the peak that we saw last October.

This spring, prices are up. Some of it is seasonal; some of it may be because we bottomed out on the prices last year; some of it is because the economy has gotten slightly better; and, of course, some of it is because of the tax credit.

Our inventory of homes on the market has risen and home sales have increased, too. I am finding homes on the market now that were on the market last year, and homes that have been on and off the market for the last two or three years are now back on the market, as home sellers see this tax credit as an opportunity.

What will happen when the tax credit ends? I am seeing some evidence of what will happen already. My pipeline of future clients is getting smaller. Requests from potential buyers and sellers are declining.

In my opinion, the tax credits sped sales up for the year, so that more sales were drawn forward to the first quarter. I suspect that within a month or two prices will start to fall again.

The savvy homebuyer may come out ahead by waiting until the tax credit ends and then going out and house-hunting and taking advantage of the prices that are likely to fall.

Please tell me that I am wrong about this, and that the tax credits gave the housing market a sustainable shot in the arm. I want to be wrong.

I want to believe that we can manufacture buyers with a tax credit — that new buyers who would not have purchased a home emerged, and it helped the economy, and it will give the housing sector the boost it needs and that we all need.

Teresa Boardman is a broker in St. Paul, Minn., and founder of the St. Paul Real Estate blog.


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