So what is happening to the market now that this tax credit has gone away?
Looks like it was a false market to me - especially on the lower end houses. There was a flood of buyers into the market when the tax credit was introduced. I remember thinking, "this can’t last" and "this isn't helping anything over $300,000". I even remember family members coming to me for advice on how to beat out all the other people scrambling to buy a ugly house that they wanted. The only reason my family was buying was the “free money” they would get from the government. Otherwise they would still be renting. I am assuming that everyone else they where bidding against (which inflated the price by probably $20,000 over what I would pay) where in the same boat. The only thing that the tax credit accomplished was to sell and falsely inflate the prices on lower end homes under $200,000. Now homeowners, banks and investors holding onto these homes will be sitting on them for a long time.
I bet at least in my town (Denver) is the lower end homes will start dropping again and keep going down for some time.
See the following article on pending home sales dropping more than 30%!! That is the most in 47 years since they started tracking this statistic.
Article -> Pending Home Sales Drop Big Time
