We’ve seen some nice activity in the Colorado Springs real estate market from the current First Time Home Buyer Tax Credit program, but the new tax credit program should be even better. Here is a link to the IRS writeup on the new program.
For starters, it isn’t JUST for first timers any more. We’ve needed a little extra incentives for some existing homeowners, to consider a buying move (as if 5% interest rates weren’t enough!). While the incentive is a little less ($6500 vs $8000), it is a good start. It also only will apply to primary residence moves, so this won’t be an investor or 2nd home purchase program. And it only applies if the prior home was your primary residence for 5 of the last 8 years, thereby excluding anyone who has bought in the last several years and is ready to move on. It will also likely require many to sell before they rebuy, putting some pressure on short term rentals. But all in all, it should help a little at the higher end, because more buyers in the qualifying categories are likely to buy in the higher price ranges than 1st timers.
Some unintended side effects of the program could be:
1. Downsizing sellers could end up putting more pressure on lower priced homes, as well as adding higher priced homes to an already glutted inventory of more expensive homes. The 90th percentile in our market was only $345,000 last month, indicating some of this was probably already happening.
2. The additional buyers this may generate will have houses to sell, adding to the inventory in all price ranges.
3. Builders will see additional activity from this, however more contingent contracts will likely appear, contributing to some increases in ‘spec’ homes, when move up buyers are unable to sell at terms they can afford. The program requires the contract to be agreed to by April 30,2010, but it can close as late as 6/30/2010, providing a little flexibility for builders, who often need 6 months to actually build a home from scratch.
It is a little cooler today, only 68 (ok, I’m bragging:), but probably the last day of the year that will be that warm. Pretty nice for November, that is for sure! Today’s photo is of Mt Sopris, taken from the hills above Basalt last month. Sopris is part of the Elk Mountains, and while not a 14er, presents a nice dramatic backdrop to the Roaring Fork Valley on the way to Aspen.
Got questions about living in Colorado Springs? Call me at 719-590-4768 or 888-568-6784! Visit me on Facebook to see even more photos!