With the precipitous 27% drop in July housing sales, the first time home buyer credit is getting renewed interest from some heavy hitters in Washington, including Secretary of Housing and Urban Development Shaun Donovan, according to The Hill. Though admitting that just one month of numbers was too little data to say whether the credit will be revived…
“In an interview on CNN, Donovan said the administration is “concerned” about the path of the industry. He defended the Obama administration’s record on supporting the housing market, amid new signs that the market is struggling alongside the broader economy.
Donovan did not rule out a further homebuyer tax credit to support the market.”
While plenty of blogs out there are again predicting real estate Armageddon, personally, I don’t think that the huge drop in July sales really should have been ‘unexpected’ at all. But no one wants to read a meh headline like “Home sales drop as expected in July as would be normal following any artificial force on a market.” (OK, I’m sure editors would shorten that headline, should it ever exist.)
Think about all the second half 2010 first time home buyers who pulled forward so that they could close before June 30 to get their extra $8000. We essentially ‘used up’ the first time buyer segment for at least a few months, and probably the remainder of 2010. By the Spring 2011 market there will be a new crop of buyers. Unless Congress intervenes first, that is.
Note to Congress: Spring is NOT the time to have a first time buyer credit expire. It was a double whammy…end of the usual Spring market–giving a credit to buyers who were going to purchase those homes anyway–PLUS the expiration of the credit. Next time, make the credit active in the late Fall and through February so that buyers are buying up the old inventory and foreclosures that otherwise would be sitting.)
And here’s another tip…if you want to jumpstart home sales with a buyer credit, don’t start hinting around about it to the press…Secretary Donovan essentially just wiped out what few first time home buyers there currently are, who are now all going to wait to see if there’s another credit.