Mortgage Rates and Home Buyer Tax Credits

The truth is that the housing market is improving. But, the fact remains that home prices are still falling and will continue to fall.

Again, we can not believe so much in the truth that we ignore the facts. Like most, I wish the housing industry was roaring back to the prices of 2005 -2006. I own enough real estate to REALLY wish that was happening. But it’s not.

Prices must still be adjusted in order for buyers to be able to afford the home. Proof of that is that the government is still subsidizing home purchases by artificially keeping interest rates low and offering tax credits to both first-time and move-up buyers. The good news is that those programs are creating a market for people looking to sell their home now. The bad news is that they will not last forever.

The question that begs to be answered is what happens when interest rates rise (the government program that has kept them low ends on March 30) and the tax credit expires (April 30)? It is my belief that, when these inducements fade, so will demand.