This is the Effect of the Housing Stimulus???

I've had a good year selling Albuquerque Real Estate, much better than last year, but I've seen many others struggling to survive.

I've been hearing a lot lately about how the $8,000 tax credit for first time home buyers is having an effect, so I though I'd pull some numbers to see how much of an effect it has had.

Here is a comparison of Closed Sales in Albuquerque for 2008 and 2009:

Be careful, if you didn't read the legend you might have misunderstood. The red line is not 2009, it's 2008! Closed sales for most of this year have been down from last year.

However, if my personal sales history this year are any indication, the tax credit has had a big effect on the number of first time homebuyers who have bought this year.

What this means is disturbing. Without the tax credit and without the influx of first time homebuyes where would we be? The number of closed sales would be even lower. Yet people are talking about a housing recovery.

The last two months show an increase in closed sales, so this begs the question has it effected average sales price?

Here is a history of average sales price for this year:

The increased closings haven't led to an increase in average sales price. Average sales price data doesn't necessarily mean the value of your house has declined as significantly, since a higher than usual proportion of sales have been to first time homebuyers who are buying smaller houses, and this effects the numbers. In fact, real estate is local, to get an idea of your home's value you need to look at recent-very recent-sales in your neighborhood.

What this data says to me is that this is the next housing bubble. Sales are artificially propped up, and when the stimulus disappears this bubble will burst.

How long can our country afford to subsidise housing by offering the tax credit today? We're just doing more of the same- borrowing from our children's future. But if you have a smaller house and you want to sell over the next two or three years, I think you should do it now!

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