The Tax Credit Effect - Can it Help Save the Market
Posted by Ryan Ward on Thursday, October 22nd, 2009 at 1:49pm.After strong mid summer sales and real hope for 2010, the residential real estate outlook has dimmed again. The $8,000 tax credit is looking very much like the last great hope for 2009 to bring back some balance - or at least give a strong push of the pendulum back in the balance direction. The chart below shows sold single family residential units compared to pending residential units monthly during 2009.
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The uptick is incredible and certainly caused by the end of the tax credit. We will have to see how much of this strong surge in pending sales actually close before making any real predictions for 2010 and it will be mid to late December before the numbers arrive. If a large number of these homes do close, we should at least see one positive trend continue and that is a lowering of inventory.
The one consistent bright spot has been a steady and consistent reduction in inventory. With prices lowering again after the typical summer uptick, I believe the reason inventories continue to go down is related more to the fact that fewer people have enough equity to sell rather than anything else. Whatever the case, we need still need inventories to keep heading downward. We have yet to reach a balanced market so supply will continue to push prices down on a macro level due to low demand caused by stricter lending guidelines - even if some areas in the north metro area remain flat.
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Ryan Ward, Principal
Premier Atlanta Real Estate
Phone: 404.630.3187
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Share12 Responses to "The Tax Credit Effect - Can it Help Save the Market"
Not sure that it alone can save the market but I do believe that it certainly can help the market and the economy as a whole to recover. I am hopeful that it is extended into next year but can already see all the special interest groups putting out their misinformation already so...
Posted on Friday, October 23rd, 2009 at 2:05 PM.
I have to agree Ryan. I think the credit needs to be extended through the end of next year at least. There are still people that will qualify and BUY if the credit is extended out another year. @David, the prior administration already did that job.
Posted on Saturday, October 24th, 2009 at 5:41 PM.
Hopefully so. The credit is a great chance for those who are in the market. Never been a better time than now to get in a new home. Let's hope people live within their means and don't use the credit as an excuse to get into something they cant afford.
Posted on Saturday, October 24th, 2009 at 10:38 PM.
The abrupt elimination of the credit will cause another crash. What they should do is phase it out over a more extended period of time to allow for a more gradual transition.
Posted on Sunday, October 25th, 2009 at 12:31 PM.
I am in full support of this extension. Hopefully, this is what the real estate market needs to stand on it's own two feet. Also, I think this will bring a whole other market of buyers and sellers that have been waiting for the right opportunity.
Posted on Friday, October 30th, 2009 at 4:36 PM.
I do not support the tax credit. Let's pay the price now and move on.
Posted on Friday, October 30th, 2009 at 6:21 PM.
Let's hope they pass a new tax credit and let's get the rest of the market involved as well. Forget about the first time home buyer credit and make it a home buyers credit..... I would love to see the 300-700k market move not just the 100-250k first time home buyer market move
Posted on Thursday, November 5th, 2009 at 12:33 PM.
I don't think program alone with 'save' the market; but yes, I do think it will help.
Posted on Friday, November 6th, 2009 at 12:14 PM.
Now that the extension has been finalized, I think we will see a lot of new inventory from sellers who are move up buyers that want to take advantage of the new $6500 credit they will now receive. I think extending the tax credit until April 30th is a good idea, but that it should not be extended after that time.
Posted on Tuesday, November 10th, 2009 at 2:08 PM.
I, for one, am very happy that the tax credit was extended and expanded. It was the right move for our country and at the exact right time. With nearly 50% of all sales this year being attributed to the tax credit, I can't imagine how bad things would have been without it. We are hearing of a tremendous backlog of foreclosures still looming on the banks' books (many are being held back illegally so as to avoid massive write-downs that would serve to reveal the true dysfunctional state of many banks' balance sheets). So it would have been playing with fire not to extend the credit and at least try to mitigate against the foreboding additional inventory that will inevitably hit the U.S. housing market.
Posted on Monday, November 16th, 2009 at 9:24 AM.
Lots of people in the country not only those first time home buyers do get big help in this program implemented by the government and hoping that they will continue doing this good things and to extend it again after May 2010 deadline.
Posted on Wednesday, November 18th, 2009 at 9:22 AM.
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I hope that they extend the tax credit. Unfortunately, all their focus is on bankrupting the country.
Posted on Friday, October 23rd, 2009 at 12:14 AM.