The recession is over! The recession is over! You have heard this many times in the media over the last ten days or so. The impact on Chicago home buyers could be huge. When President Obama leveraged the “less worse” jobs report on the cusp of the Fed meeting for August political advantage was gained. He immediately tried to address the health care initiatives he is trying to get passed as the next step in economic recovery. This is a very reasonable move for a politician and if the media and the President are moving forward, you should too.
What you should do is buy that house. Here is why. You currently have an $8000 Tax Credit available to you should you buy. This is a HUGE advantage that not everyone understands. Most people, when asked believe the credit is like all other tax deductions. It’s not. A deduction reduced an $8000 tax bill by $2000 if you are in the 25% tax bracket (to keep it simple). A credit though, reduces the same $8000 tax bill to zero. That’s right zero. The impact is misunderstood by many and dramatically more valuable for the Chicago home buyer than most incentive programs.
But the improving economy will kill this advantage soon. The reason is that if the President, congress and the media have declared the recession to be over, there will be no need to extend this program beyond December 1st when it is currently scheduled to end. Since it was launched as a “help the economy” program it is not likely to be renewed since we have recovered. It does not matter if you don’t see a recovery. If the powers that be see one, the credit goes away.
But December 1 is a long time off right? Well yes on the calendar but no in Real Estate. The facts are this. It will take 45-60 days to get to closing once you have a property selected. Which means you must select by October 1-15. It may take multiple bids to win a property since may REO and foreclosures are seeing multiple bids from several buyers so you may not win the first property you bid on. You may spend a couple of weeks bidding which takes us back to September 15-30. Now you have to be out there looking at property in your price range. It could take up to 30 days of targeted shopping to find the right one with all the inventory out there. This makes it necessary to start the home shopping process right away.
