I recently wrote about the ‘wave’ of sales that was created by the federal first-time home buyer tax credit that ended April 30th. The last day in April was the last day homes could go under contract but they had to ‘close escrow’ by the end of June. Although this closing deadline has subsequently been extended, many buyers under contract made sure that their sales closed in June, leaving a shortfall in the normal number of sales that would have closed in July. Unfortunately there was almost nothing said about this phenomenon in the press, leaving everyone to speculate that sales had taken a nose dive. In fact, sales have been down somewhat since the tax credit expired in April, but low interest rates have kept buyers interested and volume at reasonable levels. One way we track current volume is by measuring new ‘pending’ sales – homes that have gone into escrow in the last 30 days. This number has remained pretty stable over the last several months, with no dip in July. When the press does not investigate the underlying cause(s) of volume drops, and simply reports the number in a way to sell newspapers or ad space, they create potential problems in the market place. Buyers are nervous, even though this is one of the best times to buy a home in years, and can cause them to put their plans ‘on hold’ or even drop out of escrow. This behavior by the media will not be going away anytime soon, but it is frustrating that they don’t do more to look into root causes.
Tags: Home prices, media portrayal of the market, Real estate sales volume, san diego real estate, timing the market
