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REVISED
As I was driving over to my office today, I heard on WTOP exciting new statistics released by the National Association of Realtors about pending home sales jumping last month. Of course I like that news since I’m in the home-sale-biz, but I feel like there is a considerable amount of “fudge” in those numbers. I say “fudge” because the real estate market has been fueled by the deadline of the first time home buyer’s credit scheduled to expire December 1, 2009.
UPDATE: The President has just signed an extension but you need to be in a contract by May and settle before July 1, 2010.
That’s an $8,000 tax credit for anyone who hasn’t owned a home in the past three years as long as they meet certain criteria.
But last week as Congress tossed around the idea of extending it (they won’t) (they might) (they did), many bloggers decided to beat the story celebrating its continuance. I just Googled the story and read tons of comments where people were relieved that it was extended because they were involved in “short-sales” and the banks had not responded to their offers. The box-score for short-sale success is grim so most of these people will never get the home or the tax credit.
In real estate blogs there were fierce discussions over if it was right or wrong to extend the credit which sometimes blurred the fact that it wasn’t extended (yet) (they did 11/6/2009). Jay Thompson, known as The Phoenix Real Estate Guy, put out a post asking people to stop posting that it had been extended! But Google had already indexed some other guy’s post… and he had over 60 comments from relieved short-sale buyers, who are probably hopping mad right now.
My recent Northern Virginia real estate experience tells me…
So the NAR stats released today and my recent market experience tell me a few things about the economic future. Like the cash-for-clunkers program to sell cars, there is going to be an immediate drop off in home sales in December 2009 (now wait till spring 2010). Almost 80% of the short-sale buyers who have padded the “pending contract” stats will not close and end up continuing to rent. And the NAR will use the dramatic numbers to lobby Congress to reinstate the tax incentive next year.
Like I said, there’s a little “fudge” in the statistics.
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- Home sales contracts rise for 8th straight month (money.cnn.com)
- Can You Still Catch the Buyer’s Market? (movephilly.blogspot.com)
