Walter Molony
202/383-1177
wmolony@realtors.org
Washington,
October 23, 2009
Rightardia comment: The good news: Much of this growth was fueled by first time home buyers who used the Federal government's $8,000 tax credit. The bad news: One third of the taxpayers filed for the tax credit fraudulently according to IRS. Congress may not renew the credit because of this fraud. The program expires on Dec. 31.
Many of the home buyers are investors called flippers who pay cash for homes that need renovation. After one to three months of renovating the distressed property, they sell them at a handsome profit. It is likely that some of the flippers tried to benefit from the tax break. The credit was designed for first time home buyers who must live in the house they purchased for at least three years.
Existing-home
sales bounced back strongly in September with first-time buyers driving
much of the activity, marking five gains in the past six months,
according to the National Association of Realtors (NAR)®.
Existing-home sales – including single-family, townhomes, condominiums and co-ops – jumped 9.4 percent to a seasonally adjusted annual rate
1
of 5.57 million units in September from a level of 5.09 million in
August, and are 9.2 percent higher than the 5.10 million-unit pace in
September 2008. Sales activity is at the highest level in over two
years, since it hit 5.73 million in July 2007.
Lawrence Yun,
NAR chief economist, said favorable conditions matched with a tax
credit are boosting home sales.
“Much of the momentum is from people
responding to the first-time buyer tax credit, which is freeing many
sellers to make a trade and buy another home,” he said. “We are hopeful
the tax credit will be extended and possibly expanded to more buyers,
at least through the middle of next year, because the rising sales
momentum needs to continue for a few additional quarters until we reach
a point of a self-sustaining recovery.”
Even with the improvement, Yun said the market is underperforming.
“Despite spectacular gains in the stock market, principally from the
financial sector recovery, most of the 75 million home owning families
have more wealth tied to their homes.
Home values could soon turn
consistently positive and help the broad base of middle-class families,
but we are not there yet,” he said. “We’re getting early indications of
price stabilization, but we need a steady supply of qualified buyers to
meaningfully bring inventories down and return us to a period of
normal, steady price growth and to fully remove consumer fears, which
would then revive the broader economy.
Without a firm foundation for
middle-class wealth recovery, the post-recession economic growth likely
will be one of the weakest in U.S. history.”
Early information from a large annual consumer study to be released
November 13, the 2009 National Association of Realtors® Profile of Home
Buyers and Sellers, shows that first-time home buyers accounted for
more than 45 percent of home sales during the past year.
A separate
practitioner survey shows that distressed homes accounted for 29
percent of transactions in September.
See the complete article at
http://www.realtor.org/press_room/news_releases/2009/10/rebound_shows?lid=ronav0021
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