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First-Time Homebuyer Tax Credit Withdrawl Symptoms

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Services for Real Estate Pros with FHA Loan, VA Loan, Jumbo Loan,FHA Loans,VA Loans,Jumbo Loans

We are currently suffering the hang-over from the economy-altering drug of the extended first-time homebuyer tax credit.  This simple chart shows average sales activity over the past fifteen years and charts each of the last four years directly.

San Diego Home Sales - Withdrawal from tax credit

The navy blue line shows the average rate of sales for single family, detached homes in San Diego.  Error bars show a 1-sigma standard deviation (essentially, everything between the high and low of the error bars can be considered normal).  The seasonal bias of homebuyers is clearly evident with about a 33% increase from the lull of the winter months to the height of the summer.

2010 activity is described by the purple line.  Early in the year, it seemed to track the pattern of the average albeit at an 85-90% level.  But then we see a spike for June - coinciding with the planned expiration of the tax credit.  This is then followed with a major drop in July.

OK, so this is no surprise to anyone who thought about the consequences, but the pull-forward results are clear to see.  I am more interested in seeing the results for next month, to see whether or not we "snap back" or drop below normal behavior - despite the best interest rates in 50-years.

Stephanie Morrell
Keller Williams Executives Realty - Highlands Ranch, CO

Robert, thanks for sharing.  I too am interested to see where it goes from here.  I think we all hope it kicks back into gear, but it will definitely be interesting to see what happens.

Aug 15, 2010 06:20 PM
Tim Lorenz
TIM LORENZ - Elite Home Sales Team - Mission Viejo, CA
949 874-2247

Next month will tell if we are tracking closer to normal or like 2007.

Aug 15, 2010 06:49 PM
Kathy Torline
ERA Herman Group Real Estate - Colorado Springs, CO
Colorado Springs Real Estate Blog 719-287-1049

Great chart -- our market is showing the exact same "withdrawl" from the tax credit.  Best of luck!

Aug 16, 2010 02:06 AM
Robert T. Boyer
FHA Loan, VA Loan, Jumbo Loan,FHA Loans,VA Loans,Jumbo Loans - La Jolla, CA
San Diego Real Estate & Mortgage Loans, Ph.D. | VA Home Loan

Yes, a 2007 performance would.... well.... I just don't even want to tempt fate by giving words to it.  lol

Aug 16, 2010 05:24 AM