DENTON (UNT), Texas – Many potential homebuyers are racing to get a contract on a home signed by April 30 (Friday) before the popular First Time Homebuyer Tax Credit expires.

Dr. Kimberly Winson-Geideman, an assistant professor in the University of North Texas’ Department of Finance, Insurance, Real Estate and Law, has been studying the impact of the tax credit on the real estate market and the possible repercussions that might result after the credit expires this week.

Winson-Geideman says that the credit has stimulated the market by providing potential homebuyers additional financial incentives to purchase homes, but she also emphasizes that the credit can be dangerous to the economy, especially in cases where homebuyers are allowed to monetize the tax credit to cover the down payment and closing costs for their new home.

“There are significant dangers to allowing consumers to mortgage 100 percent of the cost of their home. Buyers with no equity stake are more likely to default on their loan. This was one of many problems that helped contribute to the market collapse in 2007, so it is rather unusual that the government should allow the credit to be used in that way,” says Winson-Geideman.

She also warns that demand for real estate may suffer after the credit expires on Friday, just as the demand for cars decreased upon the conclusion of the “Cash for Clunkers” promotion.

“The month following the “Cash for Clunkers” program was one of the worst in the history of the auto industry. Credits, be it for cars or homes, effectively cannibalize future sales,” says Winson-Geideman. “Hopefully this will not be the case in the housing market, as we are entering what is usually the busiest time of the year for sales.”