As I was browsing the hundreds of Tweets that had built up in my feed while I was at work yesterday, two adjacent Boston Globe Tweets caught my eye. The first that I read went something like “Survey- What will happen to home sales now that the home buyer tax credit expires?” with a link to a short, one question survey with four responses to choose from (more on those later.) The Tweet directly below that one, also by the Globe, read something like, “New Home Sales Jump 14.8% in April,” also with a link, this one to a short article by the Associated Press.
The funny thing about these tweets is that neither of them were very up-to-date, as the Tax Credit expired almost a month ago and the real estate data for April has been around for at least a couple of weeks. However, in typical fashion, I clicked the links and this is what I found.
The Globe survey that asked us to predict what will happen to home sales in post-Tax Credit America had four responses:
1.) A plateau. The gain seen in recent months will flatten out, but activity will be decent.
2.) A meteoric drop. Home sales will fall off a cliff now that the tax credit incentive is gone.
3.) A slow regression of sales activity that will lead back to another housing downturn.
4.) An increase. Sales will only continue to rise, as long as mortgage rates remain low.
I kept an eye on the results of this poll for the rest of the day, and the percentages were pretty stagnant: Response number one, a plateau, was the most popular, hovering around 33-34% through out yesterday, ending with 33.8% of the 545 total votes as of this morning, or approximately 181 votes. Response number two, a meteoric drop, was the second most popular response at 27.5% this morning, totaling about 150 votes. Response number three, a slow regression, had 23.1% of the votes, or roughly 126 total votes, and finally, response number four, an increase, was the least popular response with a mere 15.6% of the votes, which comes out to 85 of the 545 total votes.
I thought the results of this survey were fairly predictable, as the majority of the voters seemed to follow the predictions of the “experts,” who have been predicting that things will remain relatively stagnant now that the tax credit is gone, and the market is slowly stabilizing. The next Globe Tweet, however, showed a little more promise (maybe?) Here are some excerpts from the Associated Press’ Martin Crutsinger’s report:
“The economic recovery got a lift in April as orders for large manufactured goods surged while sales of new homes benefited from homebuyer tax credits…
A separate report showed sales of new single-family homes jumped 14.8 percent in April. That gain followed a 29.8 percent surge in March, the biggest monthly increase in 47 years.
Home sales have surged this spring as buyers rushed to sign sales contracts before tax credits expired on April 30. Historically low mortgage rates also helped fuel purchases.
But sales are expected to slump in the coming months as households deal with slow job growth and tight credit. Even with sales rising, the median price of a new home tumbled last month: It dropped 9.6 percent to $198,400. That indicates continued stress in the housing market…
The overall economy, as measured by the gross domestic product, grew at an annual rate of 3.2 percent in the January-March quarter. Economists thinks that figure will be revised slightly higher to 3.4 percent on Thursday…
The two months of big increases in new-home sales pushed activity to the highest level since May 2008. Sales remain well below the peaks set at the height of the housing boom.
Still, luxury homebuilder Toll Brothers Inc. posted a narrower loss in its latest quarter and saw a surge in orders for new homes. Toll’s new-home contracts jumped 41 percent in the February-April period. And the value of the builder’s backlog increased for the first time in years, the company said…
There are indications that the surge in overall home sales has slowed this month. The number of buyers applying for a mortgage last week fell to its lowest level in 13 years, the Mortgage Bankers Association said Wednesday. The trade group’s purchase index dropped 3.3 percent even as rates on 30-year fixed loans hit their lowest point of this year.
New-home sales showed strength in all areas of the country in April except the Northeast, where activity was unchanged. Sales rose 31.6 percent in the Midwest, 21.7 percent in the West and 10.8 percent in the South.”
This AP report makes me feel like the Globe’s survey was pretty accurate. Looks like the market will plateau for a little while, and in this modest blogger’s opinion, the fate of the market could be affected by a myriad of external factors that could either give it a boost or a punch in the gut. We’ll just have to wait and see.