By Sara Huebener
My dad and I often get into discussions about the economy and our observations about people's reactions to government programs, among other things. The tax credit was no exception. 
He often heard rumblings by many that the tax credit was a waste of time and money, and that it did not incentivize anyone who would not otherwise be buying a home to make a purchase. He asked my opinion as a realtor in the industry. My response is two-fold.
I think that the FIRST TIME HOME BUYER tax credit DID incentivize first time buyers to buy. Absolutely. Many of these folks have lower price points to work within, and when you are buying a $130,000 house, $8000 is substantial. When you are buying a $80,000 condo, it is even more so. It was enough to spur many renters to go out and buy a house.
In fact, one buyer I worked with still had a signed lease well into summer. By buying now, they could get the tax credit, use that money to pay out the balance of their lease, and STILL come out ahead...as a new homeowner with some leftover tax credit money in their pocket.
Also, one look at what happened to our lower bracket inventory helps substaniate the claim that the first time homebuyer tax credit worked. Lower bracket inventory dropped substantially, with an eight-month supply a couple years ago, to a less than two-month supply today. This had a trickle-up effect on housing. Those sellers in the lower price point who were able to get their home sold to the first time buyer ultimately turned around and became move-up buyers. And this was good for the market as a whole.
In terms of the $6,500 tax credit for existing homeowners, I did not feel that program was utlized as much. It certainly WAS used, but many did not feel that $6,500 was enough to incite them to sell their home and buy something else, given the drop in value in their current homes. Many people elected to hold on to their properties, due to sheer uncertainty.
That is not to say I did not find some people that raced to take advantage of the $6,500. In the cases I encountered, however, the stars aligned perfectly. Those that I worked with who were using the $6500 tax credit were making a move anyway, had owned their home at least 5 of the past 8 years, and were buying something else before the April 30 deadline. In a couple of cases, they did not even have a home to sell (i.e. they retained their current property), so there was no worry about getting one home sold before they could buy. They just found their home, we negotiated their purchase agreement, and got them the tax credit.
So yes, Dad, I think the tax credit did help the market, moreso on the entry-level side. It will be interesting to see what happens now that it is over. I'm sure by the end of summer, we'll have something new to talk about.
