I wrote a blog post around the end of April pondering which direction the housing market might go when the First Time Home Buyers Credit expired April 30. Based on the latest numbers, it would seem we have an answer.
Is There Any Good Housing News?
I commented last week on the addendum to a bill in Congress that may extend the June 30 deadline for those hoping to take advantage of the First Time Home Buyers Tax Credit. A spokesperson for the National Association of Realtors mentioned in a recent USA Today article that up to 180,000 sales could be affected if the deadline isn’t extended. They also believe that many of the buyers could pull out of their contracts if they don’t receive the credit. As of tonight the bill still hasn’t been passed.
Builder sentiment has dropped again, almost to where it was during the dead of winter. We are heading into summer after what is traditionally one of the strongest selling times of the year. Yet, the latest survey of over 500 builders shows the housing market index has dropped to 17 after it went into the 20s the previous month. (It was at 15 in January during the post-holiday snowstorms.) Anything under 50 is considered negative.
Another poor indicator is that building permit applications for homes just dropped by 17 percent to a level not seen since 1991. Again, this is heading into the warm months–prime building season for residential construction, or at least it used to be. The housing industry is still in intensive care. I don’t care what is happening on Wall Street; until the people on Main Street are comfortable with the economy as it affects them, a housing recovery is not on the immediate horizon. People without jobs, or concerned about losing their jobs, do not usually buy houses.
Old Houses and the Housing Market
What does all of this mean for us old house enthusiasts? Well it could mean a lot if you are trying to sell or buy an old house, and it is one of those 180,000 sales that may be affected by the June 30 deadline for the tax credit. Economists consider builder sentiment to be a fairly good indicator of home sales in the near future. If you are planning on selling an old house this summer, be prepared for it to be on the market for awhile. And every month the housing industry struggles, more small contractors close their doors for good. The next time you call for a plumber or electrician for your old house restoration, you may get an “out-of-service” recording.