Spurt of Home Buying as End of Tax Credit Looms

Stan Humphries, the executive in charge of data and analytics at the housing site Zillow.com, said government support was crucial in breaking housing’s acute fall in 2007 and 2008, but that it had also obscured the actual weakness of the market.

“Many people got the sense last year that we had bottomed out and were going to rebound in a V-shaped recovery,” he said.

Instead, the sales volume of existing homes declined in December more steeply than in any month in the four decades that such numbers have been tracked. Sales dropped again in January and February. Meanwhile, the sales volume of new homes fell in January to the lowest level since record-keeping began in 1963, a record broken again in February.

Buyers who want the tax credit must sign a deal by April 30 but would have until June 30 to close. Consequently, if sales volume is going to plunge after the credit expires, it will not show up until the numbers for July are reported. While Mr. Humphries says he does not expect sales that month to fall by December’s record rate, he predicts a long period of merely “dragging along the bottom,” with prices to match.

That was just what the Palestinis were worried about.

If they did not sell by April 30, they anticipated having to lower their price yet again, to compensate any buyer for the credit he would no longer get. It also meant they would not get a credit themselves on buying a new home in Philadelphia, pushing down what they could afford to pay.

It has been an unexpected ordeal. The Palestinis bought their spacious ranch house in the Des Moines suburb of Clive for $185,000 in 1995, after looking for only three days. “My feeling was it would never be a problem selling,” said Jane Palestini, a retired specialist in adoptions from China. “Ha, ha, ha.”

In early 2007, the house across the street sold in three days, but the Palestinis spent the summer getting their place ready. By the time they put it on the market that September for $265,000, prices were falling.

For months, they lived in a state of readiness for prospective buyers. To minimize clutter, they carted off many of their possessions to self-storage. They bought new pillows and kept them mounded on the beds. They bought fresh flowers and baked hundreds of cookies.

The months became years. They know their mistake: They should have kept cutting the price until they sold. But every dollar they dropped their price was one dollar less for a down payment in Philadelphia.

Their house is under contract for $225,000. After paying the agent’s commission and subtracting the cost of remodeling the kitchen, the Palestinis are at best breaking even. “You just have to ignore how much it’s going to hurt,” Mr. Palestini said.

At least they have escaped whatever trouble is to come this summer.

Their agent, Jim Heldenbrand, told them he hoped the credit would “get the momentum going.” But he also mentioned the plans of a colleague in real estate: As soon as the credit expires, the man plans to get on his Harley and just keep riding south.

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