Did the first-time home buyer tax credit really help?

Of course…

Over 1.8 million people purchased homes using the tax credit.  This credit helped increase sales of single family homes almost 27%.  Underlying trends, such as mortgage rates, perception of an improving economy, and home prices remaining steady, are increasing consumer confidence that the worst is over.  

Not so fast…

While the credit did provide a short term stimulus the likelihood is that most of the homebuyers that would have purchased later this year moved early to receive the credit, thereby compressing purchasing into a narrow window.  These buyers are now off the table creating a soft second half.  Mortgage rates are artificially low due to low demand.  28 of the 40 major metro areas still have high numbers of distressed borrowers (defined as homeowners with mortgages that are late over 30 days), fueling future foreclosures.  Some major markets, southern Florida, Las Vegas, Phoenix, and Atlanta, are twice the national average.  Home prices have remained steady due to the large number of bargain foreclosures, i.e. creative accounting of sales price.  The rise in consumer confidence is tied to the increase in corporate earnings, but this is due to the cutting of labor and expenses, not increased sales or revenue.

It makes your head spin. 

 Lawrence Yun, chief economist for the NAR, is quoted in the New York Times as saying, “…the home buyer tax credit has been a resounding success as these underlying trends point to a broad stabilization in home prices.”

 Great!

 On the NAR site, Lawrence Yun says, “So, down the road we will have our face into the headwinds of higher mortgage rates… with the expiration of the home buyer tax credit.  Foreclosures also remain troubling, as they will surely be just as high this year as last year.”

Hmmm… not so great.

But in reality, what does it matter? All that matters is what you do... how you perform in your market and what you do to separate yourself from your competition so you provide buyers and sellers compelling reasons to do business with you. 

So what are you doing?  Care to share with AR readers?