My father's been a real estate investor for more than 30 years. He typically buys old, dilapidated homes, repairs them and then rents them out.

After being around the business so long, I was surprised when he told me right now is one of the slowest periods he's ever seen. While there are always one or two of his apartments available, he told me now he has six open.

So what's causing this rental slowdown? Sure the economy is rough, but I think Uncle Sam's to blame.

A Good Deal For Renters Turned Homebuyers
You may have heard about the first-time homebuyer's tax credit. This is an $8,000 bonus being extended to focc3t-time buyers who close on a home by November 30th. The program is pretty simple -- buy a home, and the government will give you up to $8,000 come tax time. If your loan is backed by the Federal Housing Administration (FHA), that amount can even be applied upfront to your purchase.

This tax credit is bringing all sorts of buyers out of the woodwork. The person my dad might have rented to is now opting to buy a house instead. It's not surprising that existing home sales have risen for three consecutive months, and according to several sources, real estate agents are seeing a frenzy of first-time buyers. Most of these buyers are pushing to close by the November 30th deadline.

Over the next few months, don't be surprised to continue seeing a spike in home sales, and I bet first-time buyers will make 50% or more of sales as we approach the November 30th deadline.

So why do I think you should wait until after the tax-credit deadline has passed to buy your home (especially since I think mortgage rates are going higher in the future)?

Too Popular a Program to Stop
The answer is simple. If you're a first-time buyer, you can buy now, but you're likely to get a second chance at the $8,000 credit anyway. If you aren't a first-time buyer, I think you're about to get a sweetheart deal of your own.

If you don't believe me, just look to recent history. The government's "Cash for Clunkers" program has been a resounding success. It took only a week to race through the first $1 billion allotted.

The program has been adored by the public, and Washington was more than happy to allocate more funds to the program -- and actually be lauded for the money it was spending. It only took a few days for $2 billion more to be funneled to the program.

We're seeing the same scenario unfold in the housing market. The tax-credit has no doubt been popular and done exactly what it was designed to do -- stimulate the housing market. The chances of ending such a popular and successful program look slim as long as there is still strong demand.

Meanwhile, those looking to buy a home but who aren't first-time buyers have been left out in the cold when it comes to incentives, and that's a lot of folks (the home ownership rate in the United States is about 67%).

As a result, less-expensive homes (which are normally bought by first-time homebuyers) are seeing brisk sales, while pricier homes (typically bought by buyers who are "moving up" the real estate ladder) aren't moving.

With the proven success of the tax credit, you can bet the pressure will soon be on Washington to help jumpstart the entire real estate market, not just the lower end. And what better time for these incentives to start than on December 1st, when the likely extension on the credit for first-time homebuyers will also be enacted?

The result should mean great incentives for all homebuyers, but only those who wait just a few more months.

Tanner Callais

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