I’ll resist, for now, the urge to rant at how “Foreclosure-Gate” will likely throw a wrench into my home-buying plans and proceed as scheduled with Part Three of this “House Hunting” blogging series I am writing for some inexplicable reason.
I have discussed this before, but I tend to view life as one big game of chess. In 2009, most people in my position would have greeted the news of a $8k tax credit for buying a home this way:
“You mean the government will give me an $8,000 tax credit for buying a home, which I was thinking about doing anyway? This is possibly the most awesome thing to ever occur on this or any other planet!”
How did yours truly greet the news?
“Meh. I’ll pass.”
Actually, there’s more to it than that. I had reasons. And to know my reasoning is to understand, and most likely become deathly afraid of, how my brain works.
The way I figured it, the financially savvy thing to do would be buying a home after the $8k tax credit window had expired.
The housing market was struggling. The economy was down. Unemployment was high. There were few buyers, but plenty of sellers. I am using past tense since I’m explaining my viewpoint in 2009, but obviously all of these issues still remain. In short, things were craptacular.
Like he attempted to do with “Clash for Clunkers”, Obama hoped a housing tax credit would entice buyers to come out of the woodwork and pump their money back into the economy.
And just like with “Cash for Clunkers”, the $8k home tax credit was a good deal for consumers IF they happened to already be in the market for a new home (or a new car). However, if the consumer would not have — for any reason — been in the market to buy a home if the $8k tax credit carrot had not been dangled in front of them, buying just to get the tax credit was an inexplicably-awful deal.
(Not to get too graphic on all of you, but I do believe this is one of the ways foreclosures are born. And here all of you were thinking a stork was somehow involved.)
Regardless of their reasons for doing so, I knew prospective buyers entering the housing market all at once would impact my ability to get the best deal. More buyers meant more competition. Would it still be a buyer’s market? Yes. But not nearly to the same extent. I theorized it was quite probable I would have to pay more for a home than I would have if the $8k tax credit did not exist. And depending on how much more I had to pay, the tax credit benefits would be minimized or even offset completely.
But, that was just a theory. Even if it ended up being true with some home purchases during the tax credit period, it surely wouldn’t be true with all. I very well could have gotten a great deal on a house and gotten the $8k tax credit. No, this wasn’t my reason for letting the $8k tax-credit window come and go. My reason for waiting was much simpler:
I wanted a veritable smorgasbord.
Remember the original, animated version of Charlotte’s Web? Remember “Templeton” the rat and his love song to the joys of leftover fair food?
“A fair is a veritable smorgasbord
After the crowds have ceased
Each night when the lights go out
It can be found on the ground all around
Oh, what a ratly feast!”
The housing market, after practically everyone who was even thinking about buying a home in the near future had done so thanks to the $8k tax credit incentive, was going to be a veritable smorgasbord once the tax credit went away.
Think about it. There was still going to be homes for sale. Lots of homes for sale. And there was going to be even fewer buyers out there. A buyer, like me, with no home of his own he has to sell before he can purchase a new home, would be like a rat at a fairground after the crowds had gone away.
That’s why I waited.
I was reasonably certain Obama (ha!) wasn’t going to fix the economy by the time the $8k tax credit ended. I was reasonably certain, once the tax credit went away, people would leave the housing market and go right back to the woodwork. And, I was reasonably certain the market after the tax credit period ended was going to be a veritable smorgasbord to those like myself.
Fortunately, things went exactly as I surmised. There are homes in the area for 30%, 40%, 50% of what they were just three years ago. Unfortunately, as soon as I began the process of choosing a home, “Foreclosure-Gate” hit the scene.
I’ll discuss that nasty headache next time.