The drop in monthly home sales could foreshadow a tough 2010 housing market, as the federal government begins easing off its stopgap measures to boost the nation’s housing.
“Nationally, when the tax credit drops off, it’s going to be a bumpy time,” said John McClain, deputy director at George Mason University’s Center for Regional Analysis. The Washington region will feel a smallerjolt, since the job market is basically flat, he said.
But local real estate agents were wary about what the end of the tax credit for first-time homebuyers — which was expanded and extended until April — will mean for the market once summer comes.
“Without [the] homebuyers credit, the market will go back down,” said Lorena Rios, an agent with Aelis Realty in Reston. “Government must keep [the] tax credit in place until the economy improves — otherwise housing sales will suffer.”
Jim Bryant, with Weichert Realtors, said he anticipates a drop in home sales after the tax credit expires and is also concerned about recently tightened Federal Housing Administration regulations. The tightening raised credit requirements for FHA loans and increased the required minimum down payments for some buyers.
The Federal Reserve also is scheduled to end its program of purchasing mortgage-backed securities by March 31, which would prompt mortgage rates to climb from record lows. As the economy improves, the Fed also may increase record-low baseline interest rates aimed at boosting lending and borrowing.
And with the unemployment rate hovering around 10 percent, the real estate machine soon will have more than its share of potential pitfalls — without nearly as much help from Uncle Sam to keep it humming.
