Is the Real Estate Market Really Improving?

News stories abound telling us that the real estate market has bottomed or that the economy has turned around.  This article suggests that there is more to the story than would at first appear.  Much of what moved the market recently was one-time events, or distortions caused by government actions.

Some (or all) of the increase was due to a one time event – the tax credit that expires in April. The Census Bureau doesn’t know the number of homes sold due to the tax credit, so they report the Seasonally Adjusted Annual Rate (SAAR) assuming this is the underlying rate of sales. It isn’t.

The April new home sales headline number will be distorted too, but the key is the actual underlying sales rate is much lower.

Note: remember the tax credit shows up in the new home sales numbers when the contract is signed (March and April), and in the existing home sales numbers when the transactions are closed (April through June).

Read more:

About rereno

Real estate investor
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