According to Douglas Duncan, Chief Economist of Fannie Mae, the recently expired homebuyers credit only shifted demand in the housing market. He also does not expect the credit to have any lasting impact on home values in the U.S.
“Temporary tax credits change behavior temporarily,” Duncan said today at a National Association of Real Estate Editors conference in Austin, Texas. “It’s simply shifted demand forward.”
“It actually created some price appreciation that’s not supportable long term,” Duncan said of the tax credit.
The percentage of consumers surveyed who planned to buy a home in the next six months fell to 1.9 percent in May after touching a seven-month high of 2.8 percent in March, the Conference Board said last week. The New York-based group’s index of overall consumer confidence rose for three straight months as the economy expanded and the job market improved.
Prior to the expiration, sales of previously owned homes jumped 7.6 percent to a 5.77 million annual rate in April, the highest level in five months, the National Association of Realtors said May 24. The median price increased 4 percent from a year earlier.
For more information on the long term effects of the credit, and Duncan’s speech at the National Association of Real Estate Editors check out this article on BusinessWeek.com.