Has the home buyer tax credit extension flopped
The WSJ reports that based on Fannie Mae cutting their 2010 home sales forecast based on a "setback" in sales during the first quarter that the extension of the home buyer tax credit might have flopped.
Sales are always sluggish in the first quarter, March is the only month that is significant and results for March won't be available until mid April. In the Charleston real estate market, monthly sales this year continue to beat sales last year.
But even more important than the home buyer tax credit in the Charleston housing market is the higher level of activity in the "move up" mid priced homes market and the luxury real estate market that we are seeing so far this year.
Now, it would have been stupid for the government to have ended the home buyer tax credit on November 30th going into the seasonally slowest season for home buying activity. And while many people question whether there should have been a home buyer tax credit in the first place, extending it until April 30th made perfect sense because the original purpose was to stabilize the housing industry in the first place.
The home buyer tax credit did succeed in stabilizing the housing market but many sales were "pulled forward" so very few first time buyers were left to take advantage of the credit and the $6500 tax credit for move up buyers is so insignificant as to not be a motivating factor anyway.
The reason that the Charleston real estate market is doing well is because our local economy is in much better shape than many other markets around the country. The best housing stimulus is jobs and job security and once the government decides to focus their attention and resources toward getting people back to work rather than simply throwing money at anything and everything.
But don't be surprised if home sales falter nationally in the fourth quarter once the stimulus of the tax credit has worn off and the administration is back with some new plan to help the housing industry since it is such an important component of the economy. My modest suggestion, job creation will take care of all that ails us.