June 16, 2010
Marketplace radio repeated the National Association of Realtors’ (NAR) nonsense that 180,000 homeowners who purchased homes in April may not be able to qualify for the first-time buyers’ credit if the original deadline that requires a closing by the end of June is left in place. The NAR wants the deadline extended to the end of September.
As noted earlier, this claim is absurd on its face. While there was an uptick of homes sales in April, this was from rather depressed levels. The April sales volume did not approach the sales levels at the peak of the boom in 2006. At that time, the vast majority of closings took place within 6 to 8 weeks. Therefore, there is little reason to believe that this should not have been the case with the April sales as well.
This is especially likely to be the case since new contracts plunged (as measured by mortgage applications) immediately after the expiration of the credit. This means that workers would be freed up to handle the contracts signed in April.
The main effect of the extension of the credit being pushed by the NAR is likely to be to promote fraud. Many contracts are likely to be backdated so it appears that they were signed before April 30th and therefore qualify for the credit. The NAR has likely exaggerated the number of people potentially affected by the June deadline by at least an order of magnitude.
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