In the House

Now would be a pretty good time to buy a house, it would seem. Interest rates are low (probably not for long), the market is soft because of all those unemployed people, and there's that $8,000 tax credit. However, for me there's the small issue of a down payment. I'm old fashioned in that I think you should make one (of course, we were supposedly going to move away from the "zero money down" way of doing things after the mortgage mess occurred). So in some ways I feel like I'm missing out.

But then I saw this graph. Remember the Cash for Clunkers program, and how all it really did was encourage everyone who was thinking of buying a new car to do it a few months earlier, to get the bonus? This graph demonstrates that that's how it really worked out. Notice the spike in car sales, followed by the crash. The crash occurred after the C4C program ended.

There should be a similar effect for housing prices. The first graph I linked to shows you that home sales spiked right before the tax credit was supposed to expire (in November), then plummeted. The tax credit was extended to April 30. So what will likely happen is another spike in April, followed by another steep drop. If home sales stay down for awhile after the post-April drop, I should be able to hit the market without much competition and name my price. You too can profit from the perverse incentives created by government!

Besides, it's too soon for me to buy a house. I need to figure out where all the sketchy neighborhoods are in this town before I lock myself into an address.