With less than thirty days to go until the first-time homebuyer tax credit expires, home sales are starting to fade as buyers give up on making the November 30 deadline.
Reports from real estate agents and builders around the country over the weekend indicates the long-feared exodus of first-time buyers has begun, even though Congress is debating extended the credit another seven months.
In order to make the deadline, buyers must close by midnight, November 30. Real estate professionals advise that buyers who don’t have a contract on a home today will have a very difficult time making the deadline. Because of the Thanksgiving holiday and the fact that many lenders and escrow agents will take off the following week, buyers really only have three and a half weeks from today.
Endre Barathm Jr., a Realtor with Coldwell Banker in Beverly Hill, Calif. reports that he has noticed a large drop in activity since October 15th the deadline man lenders set for buyers to meet the November 30th deadline. “I wish the politicians would send a strong message to the consumers that they will pass this legislation,” he said.
In Savannah, Ga, a drop in local building permit applications in September offered a glimpse of what the local real estate market may look like without the tax credit. Permits tripled in Chatham County during the summer months as builders began construction on homes that could be completed in time to be bought and occupied ahead of the Nov. 30 tax credit deadline. Permit numbers dropped drastically in August and September, a trend the head of the local homebuilders association, Matthew Young, said reflected the industry’s wait-and-see approach to the post-tax credit market. “If they don’t extend” the credit, Young said, “they will wait and see what sales are like after that.”
Nationally, economists believe that construction spending fell 0.3 percent in September after rising 0.8 percent in August.
However, pending home sales of existing homes rose a seasonally adjusted 6.1% in September, the eighth consecutive increase, the National Association of Realtors reported today. The increase in pending sales is reflected in reports from real estate markets around the country of last minute waves of sales to first-time buyers, who have accounted for about a third of all existing home sales this year, according to the NAR.
Jim Shirley, a broker at Gum Tree Mortgage in Tupelo, Mississippi said 60 percent of the mortgages his company is working on now in New Albany, Oxford and Tupelo are directly related to the tax credit.
Joey Guyton, owner of J. Guyton Group, said 90 percent of his home sales over the past three months in a neighborhood geared at first-time homebuyers have been directly related to the tax credit.
Tracy Berry, a broker at Prudential 1st Real Estate, said buyers started coming in mid-September saying they wanted to “hurry and beat the deadline.”
In Des Moines, Iowa Agent Marcia Munger said that larger banks are backed up, so she recommends prospective buyers who want to beat the deadline explore smaller banks.
Meanwhile the extension of he credit is stuck in the Senate where Republicans and Democrats are still skirmishing over other housing related amendments that may be offered a the same time as the tax credit legislation. Optimists hope it will reach the Senate floor tomorrow.