is the tax credit a smoke and mirrors play by the government?

No, it's unfortunately just the federal government messing up the orderly flow of markets.  You think they will ever learn?

I think the government knows that housing is not on solid sustainable ground yet. They are doing what they think will stabilize the market, but I am not sure that it will work long term. Things were really a mess and I think that their choices were limited at the time.

I have often wondered about the boomer effect myself, but haven't really found any solid research as it relates specifically to housing. I look at my in laws, parents and grandparents and think about the future market for their homes. Some are in nice close in neighborhoods that most middle/ middle upper class families could not afford due to their appreciation over time. Others are in areas that retiree like, but that are not close to jobs for most people. Who is going to buy those houses? Not starter families, not recent immigrants and not even middle class move up buyers in most cases looking for more sg footage. I do not know what the market is or how it will adjust to absorb those houses.

Even if there is some growing demand for home buying as people get back on their feet and get their financial house in order (after the tax credit goes away), the supply of housing on the market will outstrip the demand because of demographic change. There are 76 million baby boomers who were born between 1946 and 1960. The oldest boomers have started to retire around 2007-2009. In the coming 2 decades when they are 62 to 80 years old, we should see more and more boomer properties on the market as they downsize, retire abroad, move to senior assisted living, or live with other family members or friends to reduce living costs or elder care, etc. . .

 Does anybody have any data on what impact boomer retirement will have on the housing market? I have seen something about a steady stream of say 3-5 million boomer homes put up on the market every year once they turn a certain age. This could again make the housing market supply side-driven and volatile.

The government's current intervention may be to little avail since it may not have accounted for this demographic change that will inevitably impact the market for some time. After all the federal tax credit ends for home buying, we may reach a saturation point on the demand side--all those who wanted to buy a home and were enticed with the tax credit, have already gotten in to the market and have bought.  Where will we find new buyers to soak up the new supply of boomer homes put on the market thereafter?

Most entry-level buyers or even move-up buyers may not be able to afford boomer-priced homes. Even at reduced home values of today, boomer homes tend to be pricier than most because boomers had more time to build wealth into their homes and to have benefited from the many years of home value increases. Boomer homes are too expensive and out of reach for younger generations, particularly if today's  workers face stagnant wages and growing inflation in the coming decade. Most people are unable to live in homes comparable to their  boomer parents. Also, the taste and needs of today's buyers are different. Many  people don't want or need a big  home to maintain.   What  person with a median income has extra money set aside to spend on fixing up an older home?  They may be financially tight. Also, it does not help their situation that gas prices are creeping up.

Pushing future demand to the present will create an utter lack of demand when it ends.  I think the market will get spanked.  Hard.