[quote=poorgradstudent]I agree that it probably propped up the low end more than the high end. 8k is a much bigger deal for a 200k house than a 800k house. I don’t think $20k is reasonable. A buyer who is considering a home worth 400k before the tax credit isn’t going to pay 420k + 8k cash. The average buyer probably wants to feel like they are getting something out of the deal beyond time value of money.
I’m guessing the high end saw about a $6-8k boost, and the low end $8-10k. It’s tough, because you almost have to assume all buyers are rational, and the bubble taught us that the opposite is often true in real estate.[/quote]
Have to disagree with this for the reason stated by the OP above: this credit is pulling demand forward at a time when inventory is artificially constricted. This will drive prices up by much more than $8-20K, IMHO.
As much as one would think the $8,000 credit doesn’t affect higher-end buyers, in every single instance where friends/acquaintances bought a house in 2009-present, they cited the tax credit as a primary driver in their decision. The top three reasons we’ve heard for people buying this past year:
-low interest rates
-low prices (for those who are price-anchoring to 2005/2006 levels, they think this is the bottom)
-tax credits
These are people who are very well-educated, make good money, and are buying $500K++ homes.
Conversely, these are the exact same reasons the CA renter family is NOT buying a home right now. 🙂
