The Morning Report
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On Wednesday I noted that the double-dip home buyer tax credit was a bust in terms of propping up prices in June. Its effects on sales weren’t much more impressive.
Unlike with pricing, sales volume actually did increase for the month of June. But the increase was weak: the nearby graph shows that despite the expiring tax credit, June’s monthly percent increase was the weakest in any of the past four years.
It would seem that the rush to the double-dip finish line mostly used itself up in May after all.
Looking forward, there doesn’t seem to be much tax credit stimulus forthcoming. The federal credit is effectively expired (the deadline for closing was recently extended for the benefit of time-consuming short sales, but buyers still had to have been in escrow as of April, so the extension will have no effect on new activity). And the state of California estimates that it may have already received enough first-time buyer tax credit applications to have used up all the allotted funds. The state has no estimate for its new home credit, but if it hasn’t been depleted as rapidly as the first-time buyer credit that just means that it wasn’t having as big an effect in the first place.
We may get to see what a somewhat less artificially propped-up market looks like in the months ahead.
— RICH TOSCANO