Timing is Everything

The housing tax credit expired on April 30th.  On May 1st the housing market suffered a historic collapse.  Transaction volumes established record lows and price cuts have followed nationally.

While the expiring tax credit vaporized demand, the delay between when subsidized houses were sold and when those sales were finalized is distorting reported price data.

Pre-expiration transactions had until June 30th to close in order to benefit from the tax credit.  This peculiar arrangement has created a timing difference where May prices are unreflective of real time market conditions during that month.

In May the Case-Shiller price indexes appreciated materially even as the housing market reeled from collapsing demand.  This phenomenon is likely to repeat itself again in June as the annual buying season reinforces sales which were prompted by expiring subsidies.