According to Yahoo News, "New-home sales in May fell from April to a seasonally adjusted annual sales pace of 300,000, the government said Wednesday. That was the slowest sales pace on records dating back to 1963. And it's the largest monthly drop on record. Sales have now sunk 78 percent from their peak in July 2005." The slowdown, or perhaps more appropriately, the crash, was attributed to the cessation of federal tax incentives for new home buyers. "We all knew there would be a housing hangover from the expiration of the tax credit," wrote Mike Larson, real estate and interest rate analyst at Weiss Research. "But this decline takes your breath away."
Does this mean that home buying is not a realistic option right now? By no means.
First, buyers who entered into contract negotiations before the month's end, before the cessation of the tax incentive, should be aware that they will still receive the incentive if they close before September of this year.
Second, banks are facing a new wave of foreclosures and many people drowning in underwater mortgages are turning to short sales. For buyers, this means that many homes that would have been much overpriced two or three years ago are presently on sale at very reasonable rates.
Mark Fitzpatrick at Fitzpatrick and Prince Real Estate believes the federal tax incentive was overrated. According to Fitzpatrick, "Sure, it is great to get an $8000 gift from Uncle Sam at the close of an escrow, however, an $8,000 tax break is inconsequential when home buyers are presently able to purchase homes at well below fair market value. Because of the foreclosure situation and banks' willingness to work with home buyers, we've been able to negotiate upgraded homes for our buyers at substantially reduced prices to the point that an $8000 tax credit becomes a non-issue."
If you're a home buyer looking for an opportunity to get into a great home at a great price, Mark Fitzpatrick is able to help. Give Mark a call at (800) 829 5158.
