[quote=ybitz]Does anyone know how the $8k federal first time home buyer credit boosts house prices by? In other words, all else being equal, how much should house price drop after the credit expires?
My thoughts:
Not all buyers qualify for the $8k credit. So the price boost we would expect to be less than if everyone qualifies.
The upside of $8k cashback to buyer is more than the downside of $8k increase in house price. Cash in hand now is worth more because of the time-valued worth of money, plus it amplifies how much they can borrow.
Just pulling numbers out of my ass, I think the $8k credit had boosted the price by $10k-$20k. Lower range for expensive houses (where the credit doesn’t help as much and fewer buyers in that category are first time home buyers), and near $20k for starter-homes because nearly all buyers qualify, and it boosts demand while keeping the supply curve the same. And we should expect a drop in house price after the tax credit expires.
What do you all think will happen after the tax credit expires?[/quote]
I have calculated how much this 8K is gonig to curse the new home buyer in case if future prices slide occurs (sure it is when interest rates bit increase and other real factors surfaced)- here is my calculation
Due to 8k RUSH there is some slow rise in SD home prices occured especially in the areas like 4s Ranch and all it shoots up around 25k to 40K depending on the house.
Due to 8K rush folks who buy is forgetting the 6% brokerage to pay when they want sell at that particular time – this costs around another 40K for houses to be around 650K range onwards
Due to this *k rush folks have to pay closing costs around another 8k(minimum)
When total all above factors I come up an estimated total of 69K to 80K is the amount one has to prepare to sacrifice in case if anything happens for the housing market and those needs to sell their house on those days. My question is will they get that house be appreciated that much 70K soon? – in market downtime or just 8k knocking them to 80K in the harsh times (well needless to say that equity 20% of price or more would also in trouble).
