Reading a couple of reports (Wells Fargo Securities) about the data from the tax credit, I will share…
Housing Data Wrap-Up May 27, 2010: “Once the tax credit program ends, home sales are likely to retest the lows hit following what was originally thought to be the end of the first-time homebuyers tax credit last fall. Mortgage applications for the purchase of a home fell 9.5 percent during the first week of May, 27.1 percent during the second week, and 3.3 percent this past week. The slide in purchase applications has been sharper and more immediate than it was last fall, suggesting the pullback in sales and new construction could be greater than many currently expect. PUrchase applications have tumbled a cumulative 36.3 percent over the past three weeks, falling to their lowest level since 1997. By contrast purchase applications fell around 34 percent last fall.”

Then on June 4th, there was this to say: “If there was any doubt about whether we would see payback from the homebuyers tax credit, that doubt has been all but erased over the past few weeks, as mortgage applications for purchasing a home have plunged. After surging to 291.3 on April 30 from 196.8 on February 19, the Mortgage Bankers Association’s purchase index has since dropped 39 percent to 178.0 for the week of May 28. That is the lowest reading since the week of April 11, 1997, and comes despite a 30-bp drop in mortgage rates since April 30…Now that the sugar high from the homebuyers tax credit has passed, it’s time to get back to reality.”

I was not a fan of the tax credit policy. There were a lot of better options that could have been implemented that would not have cost the taxpayers any money. Why the tax credit was used, is beyond me. The problem with tax credits is that they come to an end and so therefore the artificially induced marketplace. I believe that the marketplace is going to be just fine here in Alexandria, once we get back to “normal”. I was saying to my clients, that May’s sales were down which is unusual…but this year we had the demise of the tax credit to deal with. Oh well, it sure keeps my life interesting:)

Source: Wells Fargo Securities, Mortgage Bankers Association