Economists and forecasters were predicting an awful 13% decline in existing home sales for July, to 4.65 million units. This, we were told solemnly, would be the worst since 2009.
In hindsight, those making the predictions seem to have been the sort of wild-eyed optimists whose sunny belief in the strength of the housing market got us into this mess in the first place. The actual figure for home sales, according to the National Association of Realtors, was 3.83 million--a 27% decline. The last time single-family home sales were this low, Bill Clinton was president, "This is How We Do It" was topping the Billboard charts, and our nation was grieving over a recent terrorist attack--in Oklahoma City.
When Peter and I were shopping for a house before we got married, we were astonished by the effect that the tax credit seemed to be having on people. Prices were climbing rapidly, as people got into bidding wars that raised the price by more than 8%. Inventory vanished rapidly; the average days on the market for a new property that wasn't ridiculously overpriced, half-finished, or occupied by tenants who wouldn't let the place be shown, was 1-4 days. This was insane, given that here in DC, a modest rowhouse in an "emerging" neighborhood, with dated or incomplete renovations, starts at $300,000 and marches rapidly north from there. A relatively small tax credit should not have driven people into such frenzy.
