NAR was all over the news last week with how May’s pending sales ‘jumped’ six percent or something, and sales were up. Well, the final end of the tax credit for new home buyers ended the end of April, so it isn’t really surprising that suddenly a lot more homes have pending sales; they have till the end of this month to actually close the deals.
So, we had a good pending report; We will have good sales numbers for this month, we will have good sales numbers for June. [June 30 is the final date to close and get the credit.]
AND THAT’S IT. Seriously. Applications for new home buyer mortgages have dropped some 40% since then, back to 1997 levels, so we are about to see a huge drop off in owner buyers.
Flippers will keep buying discounted bank owned homes, fixing them up, but unless they can figure out some way to flip them to each other like they did in the bubble, the laws of supply and demand will win out. That is why they call them LAWS in economics, and not the suggestions of supply and demand. Because they are absolute.
Home prices are slow to drop, people take months of not selling a home to start reducing their prices, but they absolutely will begin dropping, and if rates ever rise from today’s historic lows, they will drop even more.