January-to-June change in the 25-MSA RPX transaction count for each of the last 10 years, says RadarLogic. To illustrate the impact of the homebuyer tax credit on housing demand, the actual change in transactions in 2010 is shown alongside the change assuming June transactions were reduced by 15%. This reduction reflects an estimate of sales that would not have occurred in June without the tax credit.
It’s taken me too long to get to this report from Radar Logic, which compiles and analyzes real estate data, but the information remains pertinent.
Michael Feder
Noting distortions from the homebuyer tax credit, President and CEO Michael Feder looked at what seasonal activity in the U.S. would have been without this “pull through” and assumed that 15 percent of the activity (transaction counts) came from this accelerated demand. Says he:
By backing these transactions out of the actual numbers and comparing the pro-forma to history, we see some pretty alarming statistics.
If this analysis is even close, then the housing market dynamics are weak at best.
RPX (Radar Logic’s index) composite prices have not really moved since January of 2009, Feder continues, saying any affect on prices from the credit probably was positive. He observes:
Without it, activity remains well below history at a time when it should ‘naturally’ have been stronger. Add to this the overwhelming supply of ‘distressed properties’, those with delinquent or defaulted mortgages and the dynamics are bleak at best.
There are simply too many homes for sale relative to the natural demand. And home buyers are not demonstrating any perceivable confidence that we have found the bottom, yet. As we begin to see the data for the fall, we expect it will be soft, that volumes and prices will move lower, perhaps precipitously.
He questions whether housing will be the source of increased consumer confidence to generate the spending needed to revive the economy. “If anything, housing is going to make consumer psychology worse,” Feder contends. “If we are right, the odds of a double dip in the economy may well be more than one in four.”
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Malcolm Carter
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Charles Rutenberg Realty
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