Difficult question?

[huruta]

We are contemplating buying a home in Seattle. When, exactly is a bit up in the air. We could either 1) buy in spring to get in on the $8k 1st-time home buyer tax credit, or 2) buy later in the year, e.g. fall. Financially, we'd be more comfortable buying later but we could do either option. Assuming the tax credit actually expires this time (it can't go on forever, can it?), in what situation would it make more sense to buy in the fall?

It seems that prices might fall after the tax credit expires and after any summer rush (agree/disagree?). We'll be looking in close-in neighborhoods (QA, Phinney) so not sure that they'll drop all that much, though presumably the pool of buyers will be smaller as most will have taken advantage of the credit.

I think the thing I don't understand the implications of, is the fact that the federal government will wind down its buying of mortgage backed securities in the spring and that Fannie Mae has very little in reserves right now and foreclosures don't seem to be slowing (not sure I said all this exactly right). How will all this impact inflation? interest rates? other home buyer factors? Any insight, advice would be appreciated.

[ira s]

huruta,
I don't know what price range you're interested in, but I did notice that quite a few Queen Anne homes went pending this fall after significant price reductions. Seems to be that there are tradeoffs. If you buy in the spring, there will be more homes to choose from. If you wait til the fall you'll have more money saved. Plus sellers tend to get a little more desperate in the fall. When the rain and cold come some of them are either more likely to take a lower offer or reduce the price. But there's less to choose from in the fall.
But...Queen Anne and Phinney are both nice, desirable areas, and even though they are expensive areas, they've tended to be a little more stable price wise than other neighborhoods, and haven't dropped as much as other neighborhoods. My guess is that there won't be a significant price difference whether you bought in the spring or in the fall. It's hard for me to fathom that a lot of Queen Anne or Phinney buyers will be swayed by the buyer credits.