Now that the hoopla and hype surrounding the Federal homebuyer tax credit, paid for with Chinese debt, is over - I was wondering just what the impact would be on a typical local market such as Lancaster County, PA.  Real Estate was looking pretty good in April, and the phone was definitely ringing.  When I was asked (daily) what the market was like, my usual answer was "we're in a swoon".  As people realized that congress was not going to extend it once again a bit of a frenzy ensued, as has been reported across the nation.  Pending sales were way up, everybody seemed happy, and the news reported a return to normalcy.

Well, let's look at the May returns for Lancaster County PA home sales - I expect that this story will be repeated in many similar markets as well.

April and May sales are just looking stellar, tracking with 2008 numbers (pre-TARP).  Who's going to complain about that? 

New listings reached record numbers during March and April - sellers are no fools!  Get in while the gettin's good...  However May consequently saw the lowest number of new listings in years.  Buyers looking last month had to put up with many overpriced ("didn't sell EVEN with a tax credit") homes.

Now for the really bad part.  Pending home sales fell in May from the historic high of April (as would be expected with a Federally-mandated date) to an historic low in May.

Now, there will still be a good number of homes that will close from the tax credit in June, since buyers were allowed to stretch their settlement out until 6/30.  However, with so few buyers getting in the game in May I would expect the numbers for the balance of summer to lag behind even 2009.  Even now word on the street is that qualified and ready buyers are few and far between.

So here's the snapshot of May for Lancaster County:

A 10% increase in homes closing (tax credit), a 6% drop in new listings and a whopping 39% drop in homes going under agreement.  with 17% more listings out there and 40% fewer buyers, sounds like a bad mix.

On the plus side (I guess), average home prices stayed virtually unchanged from 2009, with sellers listing for $40,000 more on average than sellers are willing to pay. 

it remains to be seen whether the tax credit really created something good for the real estate market in 2010 - it certainly helped April and May out.  What will the dog days bring???