Recently, the Federal Government offered home buyers a sizable tax credit. How has this has affected the housing market and the economy overall?
It should be noted that economists believe that the last sectors to reflect any change in current economic conditions would be the job and housing sectors. These markets traditionally are the last ones to feel any change in terms of reflection of an overall economic improvement. That said, when the federal government seeks to encourage the purchase of property, there is some initial allure to the prospective buyers. Yet, the overall condition of the market plays more of a role in this. If a prospective buyer can only buy a property, even with the tax credit, after selling their own property, this might play a larger role than anything else. In a current period of economic contraction and a lack of vitality in the marketplace, the prospect of trying to wait out a sale might be more discouraging than anything else. In the end, I think that this might be affecting the housing market more than the tax credit. Certainly, people would be encouraged to purchase properties with the tax credit. Yet, I believe that the individuals are confronted with the reality that little, if anything, is moving to sell in the marketplace and with such a slow growth rate in the housing market, the notion of waiting it out for a sale in order to purchase could be more of a factor than anything else.