Statistics point toward a strengthening Washington housing market, but government cash — much of which is about to go away — could be propping up area home prices and sales.
Walter Molony, a spokesman and analyst for the National Association of Realtors, said the government programs deserved a lot of credit for calming the turbulent housing market.
“The sales market would have languished, we would have much higher levels of unsold inventory, and we would not be seeing the price stabilization that we’re seeing now,” Molony said.
The feds have offered new homebuyers an $8,000 tax credit and have injected billions of taxpayer dollars directly into the mortgage market to keep interest rates low for homebuyers.
Some national experts — including George K. Yin, former chief of staff for the Congressional Joint Committee on Taxation — question the programs’ cost-effectiveness. But most agree the government’s intervention has helped sell houses.
“The government’s tax credit is certainly having an impact,” said Alexander Paul, national research director for Delta Associates.
Pauline Thompson, president of Tysons Realty in Fairfax, also said the tax credit was spurring buyers back into the housing market.
But both the new homebuyer incentive and the feds’ intervention in the mortgage market are scheduled to end soon, and no one knows how much the loss of government cash and incentives will hurt the housing market.
“We think mortgage interest rates will be trending up a little bit later this year,” Molony said. “But it’ll take another several months for us to see the effects.”
Paul agreed, though he said the Washington area’s positive economic and employment projections could be enough to offset the loss of government cash.
“It’s still too early to tell,” he said.
