Early signals about the effect of the now-ended home buyer credit
Mortgage applications are continuing to show the impact of life A.T.C. -- After the Tax Credit, specifically the $8,000 incentive for first-time home buyers and the $6,500 incentive for repeat buyers.
"Purchase applications are now almost 40 percent below their level four weeks ago," Michael Fratantoni, vice president of research and economics at the Mortgage Bankers Association, said in a statement Wednesday.
People wanting to refinance accounted for nearly three-quarters of the mortgage applications in the last full week of May.
Mark Vitner, a senior economist with Wells Fargo, wrote in a report last week that the numbers -- which had already fallen significantly at that point -- seemed to be sending a message:
"The slide in purchase applications has been sharper and more immediate than it was last fall, suggesting the pullback in sales and new construction could be greater than many currently expect," he wrote. "Purchase applications have tumbled a cumulative 36.3 percent over the past three weeks, falling to their lowest level since 1997. By contrast, purchase applications fell around 34 percent last fall."
Vitner's forecast: a "modest recovery gradually taking hold during the latter part of this year" in terms of housing starts, but home prices falling "a little further over the course of 2010, with a bottom being reached in either late 2010 or early 2011."
The mortgage stats and Vitner's thoughts are both national, not local. What's your local perspective? What strikes you as good measures of the expired-tax-credit effect?
Next week, we'll see one useful stat -- how many buyers signed contracts on homes in the Baltimore metro area in May. That will be part of Metropolitan Regional Information Systems' report on multiple-listing service activity.
Categories: First-time buyer tax credit, Mortgages, Repeat buyer tax credit
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Comments
Since 2005-6, the bottom for housing prices has been "about 6 months away".
Hardy-har-har!
Posted by: Darwin Rules | June 3, 2010 9:56 AM
Since the credit has expired a couple homes for sale in my neighborhood have been taken off the market, and the others have seen pretty substantial price reductions. (Not that the sellers still aren't trying to make a beyond-decent profit...)
Posted by: Mary | June 3, 2010 1:23 PM
In our modest price range the market has been completely stagnant for the last 2 months.
No houses are coming up for sale and nothing is being sold. The listing updates are mostly finalized sales from the credit times and price drops on the properties already on the market. I've also seen some properties just taken off the market after the credit expiration.
Posted by: Jelena | June 3, 2010 2:47 PM
Don't worry folks, we have about 8 more years for the foreclosure mess to clear through the market. If you don't buy today, you will get a better deal tomorrow. Just keep waiting...
http://www.businessinsider.com/mark-hanson-mortgage-foreclosure-2010-6
Posted by: Metzger | June 4, 2010 4:41 PM
The $8k credit worked like cash for clunkers. Sales numbers went up temporarily and fell when the crutch was removed. In fact, this may hurt the housing market, as the next set of potential buyers delay, waiting to see if the government gives them free money, too.
Posted by: Matt | June 7, 2010 5:21 PM