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Look at the drop starting on May 1st. This graph should be all you need to realize that the first time home buyers tax credit drove a lot of sales at the moment, but they would be sales that were pulled forward. In other words, if the tax credit wasn’t there, the sales would probably still have happened, but they would have been spread out over time rather than pushed back into April.

First of all, the banks are short staffed, so they can’t file NOD (Notice of Defaults) and complete the foreclosure process as fast as new borrowers are falling into default. The average borrower in foreclosure has been delinquent for 438 days before actually being evicted, up from 251 days in January 2008, according to LPS Applied Analytics. That is the first part to Shadow Inventory.

Graph showing the rise and fall of pending sales over the last 3 months.
Click To Enlarge

This has also created other problems. I had a closing that kept getting pushed back because FHA hadn’t review the file to release the funds because they were so backed up. We finally closed last week and from talking to the buyers at the closing, they just wanted to close before they lost the credit, but it wouldn’t have stopped them from buying, they just bought now rather then this summer when they originally planned on moving.



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Dr. Robert Doebler7/30/2011

robertdoebler@rocketmail.comNice write up. There was a lot of ups and down due to the unpredictable nature of the market. According to reports, home sales rose 12.3% in December to 5.28 million annualized units. The increase was above the market expectations for sales to rise to to rise to 4.87 million in the month.

Mike Jacka6/25/2010

mikej@realestatepromo.comAll the first time home buyers tax credit did was pull forward sales that would have happened anyways without the credit. I also heard that the sales in May was the lowest level of sales since NAR started keeping records in the 1960's.

James Williams6/25/2010

jewilliamsgroup@earthlink.netI just read an article in the Business times that shows that the first time home buyers tax credit didn't do what was expected. As a matter of fact homes sales dropped 2.2% for the month of May.

realestateinvestingnewswatch.com6/8/2010

pingbackPingback from realestateinvestingnewswatch.com A Closer Look At The Effects Of The Federal Tax Credit Program | Real Estate Investing News Watch Blog Aggregator

Kevin M. Lancaster - Willson6/7/2010

kevin@kevinsellstheupstate.comYep. Cash for clunkers housing style.