Or, at least, nobody who was paying attention. The National Association of Realtors reports that housing sales had a terrible, horrible, no good, very bad month in July:
Existing-home sales, which are completed transactions that include single-family, townhomes, condominiums and co-ops, dropped 27.2 percent to a seasonally adjusted annual rate of 3.83 million units in July from a downwardly revised 5.26 million in June, and are 25.5 percent below the 5.14 million-unit level in July 2009.
Sales are at the lowest level since the total existing-home sales series launched in 1999, and single family sales – accounting for the bulk of transactions – are at the lowest level since May of 1995.
Lots of neat graphs here.
Megan McArdle puts it well:
The depth of the collapse suggests that in fact, the housing tax credit was not generating new demand as much as moving demand forward a few months. That means that we’re going to have to work out the aftermath in months of low home sales.
My recollection is that this was practically everybody’s prediction of what would happen as a consequence of the Administration’s home-buyer’s tax credit. Not only would it reduce tax revenues, it would merely time-shift home sales by a few months. That certainly was my prediction.
What is it about time-shifting that people don’t understand? If your policy is going to be one of time-shifting, you’ve got to shift it far enough so you’re beyond the crisis. Now it’s just in time for the mid-term election campaigns! Jolly.
If you make a bigger time shift then the resulting decline will just be that much larger. For example, the recent policy might have moved purchases forward say 6 months to a year. That is people who would have been ready to buy in September 2010 bought in March 2010. To get someone to buy now who wasn’t even thinking about it or maybe hoping to in say 2 years or 3 or even 5 years you’d have to offer a much larger incentive. Then when you stopped offering those incentives you’d drop right back down to what we saw in July from a much higher position.
Conversely you could just keep the program going as is for years, but again, you are going to have that withdrawal symptom which could precipitate the next recession. That is you create a bubble and then deliberately burst it when doing so will pose the least amount of electoral damage.
In any event it is a horrible policy in that it just puts off the inevitable, distorts the economy and suckers people into jobs that the policy maker knows full well he is going to destroy later on. But that is democracy for you. Yay for democracy, as Mencken put it, the only system of government that gives the people what they ask for good and hard.