Robbing Peter to Pay Paul.
That is the result of the tax credit. Sure it boosted sales earlier in the year, but the price that is being paid is pretty extreme.
With pending sales down 30 percent since April and 16 percent from last May in the peak selling season, this does not call for a happy selling summer for agents and with those who have homes on the market.
I hope agents did not spend their checks to quickly as to add to the fun jobless claims are rising and the manufacturing index is falling. Oh, and construction spending is dropping too.
Welcome to the dreaded double dip folks. It is going to be an interesting ride.
And to Vicki Cox Golder, National Association of REALTORS President, I guess the traffic did not hold up like you promised your members.
The index of pending home resales dropped 30 percent from the prior month, figures from the National Association of Realtors showed today in Washington. The drop was the biggest in records dating to 2001 and compared with a 14 percent decrease forecast in a Bloomberg News survey of economists.
The decline shows that the industry at the center of the financial crisis remains vulnerable in the absence of government support. A stabilization in housing will depend on gains in incomes and employment that may stem foreclosures and give Americans the confidence to start buying again.
“Demand will be pretty depressed in the next few months,” Scott Brown, chief economist at Raymond James & Associates Inc. in St. Petersburg, Florida, said before the report. “We’re still going to have a big overhang of foreclosures. There’s potential for prices to slow down a lot more.” via Bloomberg
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{ 3 comments… read them below or add one }
This is how most free handouts effect the market after they are taken away. No surprise for me.
Golder's comments come really at no surprise to anyone in the real estate business. This is the reality that we have been living with the past few years now.
Ditto at omega 3. Its great to see a real estate blogger finally speak about the fickle nature of handouts. The tax credit was never a feasible solution. Realtors should have been preparing for the Double dip and decreased demand rather then expending so much effort to extend a temporary and ill suited tax credit. The faster the handouts stop the quicker we can begin the recovery… lets tell Congress and the NAR to not drag this on any longer….