With the pending expiration of the homebuyer tax credit about 36 hours away, we’re getting closer and closer to seeing what the true state of the housing and real estate markets will really look like when the credit is no longer in place.

**Poll: Do You Support the Extension of the Homebuyer Tax Credit’s Closing Deadline?**

Earlier today I was discussing the upcoming expiration with a colleague when she asked me, “What happens to the housing market without the homebuyer tax credit?” I proceeded to tell her that May’s dismal home sales numbers have already given us a taste of just how bad the falloff from the tax credit has been and will be.

April’s home prices report — which came out today — provides us with another glimpse to the approaching downturn:

Home prices rose 0.8% in April compared with March and were up 3.8% from a year ago, according to the S&P/Case-Shiller Home Price Index of 20 major housing markets.

That good news is tempered by a couple of factors. First, the one-year comparison was against a low-ebb mark. In April 2009, prices were just above a five-year low. Overall, prices are off 30% from their peak.

Furthermore, since the tax credit’s (contract-signing) deadline was at the end of the month, April’s numbers likely reflect the influx of borrowers rushing to take advantage of the homebuyer tax credit (emphasis added):

“Other housing data confirm the large impact [of the tax credit], and likely near-future pullback, of the federal program,” said David Blitzer, a spokesman for Standard and Poor’s.

Once the tax credit fully expires, home prices are likely to take a beating, according to Pat Newport, a housing market analyst for IHS Global Insight.

“The housing glut and foreclosures will drive the national Case-Shiller index down another 6% to 8%, with prices bottoming in 2011,” he said.

There are two schools of thought you can have when reading about the homebuyer tax credit’s influence on demand: 1) It’s necessary but disruptive; or 2) disruptive and ultimately detrimental (how can we get a true picture of the housing market when the credit continues to cloud the natural process of recovery?).

Readers: Which school of thought to you ascribe yourselves to?

We’ve received a blitz of comments and votes from concerned readers who have explained their own individual circumstances and why they’re either depending on the tax credit, why they support it or why they disagree with it. We want to thank all those who voted on our poll and commented on our posts.

Filed under: Homebuyer Tax Credit, News, Real Estate Market, VRN