This year, between April 23rd and May 5th, 189 homes went under contract in the Tri-Cities. Between May 6th and May 19th, 72 homes went under contract. Both are 14-day time periods in the same market. What can explain this tremendous drop? Why would Tri-Cities home buyers suddenly stop writing contracts at the pace they had been? Over 60% fewer homes were sold in a 14-day time span than had been sold in the previous two-week time span. What happened?
The real estate tax credit expired.
In order to qualify for the $8,000 first-time home buyer or $6,500 move-up buyer tax credit, an offer needed to be written and accepted by April 30th, and the sale must close before June 30th. Clearly, as evidenced by the precipitous drop in sales written at the beginning of May as opposed to the end of April, the tax credit incentives most certainly had an affect.
So it makes me a bit anxious when I see headlines about an improved real estate picture for the nation. This quote is especially concerning –
This year looks to be different. Already, falling interest rates, an improving economy and a last bit of economic stimulus are helping the housing market stage a revival. In April alone, sales of existing homes jumped 23% from a year ago, according to the trade organization National Association of Realtors.
Well, of COURSE sales jumped in April. The tax credit was going to end at the close of the month. Anyone who wanted to take advantage of it needed to get it done right then. Look for an article this time next month saying that the recovery was not what they thought. It’ll be interesting to see what May’s numbers shake out to be across the nation, because we already know that for the first three weeks of May we saw a definite decline in the Tri-Cities real estate market.
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