Do not buy a house in the next 30 days

If you are in the market for a house, you might want to take a break for the next 30 days or so.  Why?  The first time homebuyer credit, which will give most people $8,000 for buying a house, is due to expire on April 30.  There is also a smaller credit of $6,500 for those who are repeat buyers.

Technically you don't have to own the house by April 30, you just need to be under contract.  The contact will still need to be closed by June 30 though.  While there has likely been a run-up in prices over the last several months due to this credit, with 30 days to go you can bet people are feeling antsy.  Many homebuyers are counting on this $8,000 to buy new furniture, pay back relatives loaning them a down payment, etc.

So you can expect a flood of buyers this month, especially since you can bet the National Association of Realtors will blitz the airwaves.  With the pressure on, people are more likely to get into bidding wars, just to make sure that that contract is signed by the end of the month.  But with average home prices close to 200k, even paying as little as 4% extra (or allowing a deal to go through without a 4% seller subsidy) will wipe out that $8,000.

For those of you who are able to wait a few extra days, and forgo the cash, you will likely find a decent buyer's market.  $8,000 is equivalent to $40,000 of house value, if you figure a 20% down payment.  I'm not saying prices are going down by $40,000, but the average will likely be north of $8,000; representing significant savings.  Additionally, with many buyers likely dropping out within the next 30 days, supply will probably continue to outpace demand.