Is Tax Credit warping the view?

Thank you National Association of Realtors for keepin’ it real. According to data released today, April saw a 7.6% increase in resale of homes. In a rush to beat the tax credit deadline, there are currently 5.77 million buyers rushing to the closing table. But, before touting “economic health regained”, NAR also reported that available inventory jumped 4.04 million, or 11.5%, in April too.

April’s inventory surge cannot just be blamed on the season. The rise was much higher than normal. At the April sales pace, that means an 8.4 month supply of homes is just sitting on the market.

Lawrence Yun, NAR’s chief economist, pointed out that “distressed” sales, including foreclosures and short sales, accounted for 33% of sales in April. This was actually down from 45% a year ago. He suggests that the increase in available homes is likely due to investors needing cash flow or homeowners who may have been apprehensive to sell are giving selling a whirl.

Housing prices have risen 4% over the last year and the trend in sales price has stayed stable over the last four months. However, current numbers are still sitting at or near the bottom. REO inventory is on the rise and tens of thousands of homes are in the default pipeline. So, there will be dips in future pricing or at least prices will be weighed down.

Without the tax credit incentive, mortgage applications are down. In fact, the Mortgage Bankers Association reported purchase applications down 27% last week despite low rates.
It is painfully evident that the surge in “pending” home sales in April was directly related to the tax credit. I think the rest of the spring buying season was spent early.

Some cool NAR stats to define your business direction:

• Single-family home sales rose 7.4% in April and are up 21% from last year
• Condo sales went up 9.1% in April and are up 42% from last year – bring back condos!
• First-time buyers were 49% of April sales, BUT all-cash buyers accounted for 26% of sales.
• Existing home sales are up 23% over last year.

Overall we are not out of the woods. Keep your compass handy and we work to help people together!
To Your Success!