As the housing tax credit deadline fast approaches, homebuilders across the country are pumping out a few more homes in hopes of enticing some last minute buyers.
Is this a good idea? It’s hard to really say at this point, but the logic of many builders makes a lot of sense.
Builders lost sales during the previous housing tax credit program that ended in November of last year and many are afraid if that they aren’t prepared for a late push, the same thing will happen again.
On the surface, this seems to make good sense. The problem with this theory is that if it’s wrong, it’s going to slow down an already creeping housing recovery. If builders decide to rush houses to market before April 30, the housing tax credit end date, they are assuming a lot of risk. If they don’t sell these spec homes, they will be taking a step backwards. Is this really the time to be taking this kind of risk?
Some analysts believe that the first tax credit program satisfied the quick flurry of demand for discounted housing. Many are afraid that the second tax credit program will not cause the same amount of market participation from first-time buyers. And some economists believe that the tax credit has not helped housing at all. Who is right?
At this point, no one knows how this will play out. Making consumer behavior predications based on emotions is a risky play and that’s exactly what some builders are doing. They are banking on consumer urgency and emotion. These are two things that we can never truly forecast. Building homes based on consumer behavior assumptions could have a very negative outcome.