The Tax Credit Effect - Can it Help Save the Market

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.

Discussion

#1 By David Mana at 6/22/2017 4:12 AM

I hope that they extend the tax credit. Unfortunately, all their focus is on bankrupting the country.

#2 By Denver Homes at 6/22/2017 4:12 AM

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...

#3 By C Richey at 6/22/2017 4:12 AM

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.

#4 By David Mana at 6/22/2017 4:12 AM

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.

#5 By Kim at 6/22/2017 4:12 AM

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.

#6 By Robert Worthington at 6/22/2017 4:12 AM

I do not support the tax credit. Let's pay the price now and move on.

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