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Bye Bye Home Buyer Tax Credit

It's the last day of the home buyer tax credit…for the second time.

AP

Of course given all the hype on the home builder web sites, you'd think this was the last day of the housing market as we know it.

They're all offering deals deals deals…

Lennar keeping the doors open late and letting you sign on the dotted line for a $25 down payment (seriously), and Ryland offering to double the tax break. And is it working? Well, hard to say. What I can tell you is that we were trying o find a home buyer signing on the dotted line today for a TV story, and we had a really hard time. All the deals kept falling through.

One guy we spoke to in suburban Maryland just couldn't get the seller to budge quickly enough. Another in New York City was rushing to get a developer to sign by midnight but there seemed to be some issues. I emailed a Realtor I know out in Burbank, CA, David Fogg, and he responded:

"Yes we have had some under-the-wire pushes to get offers accepted before the deadline, but I expected more. Here’s the issue on our side of town….no one really buys or doesn’t buy over $8000.00 when the sales prices range 450K and up; they like the money, don’t get me wrong, but in other areas where homes are 80K it makes a bigger difference.

The real story is the intense difficulty qualified people are having in obtaining financing, as well as the appraisal regulations which are hurting many home sales."

So does the housing market implode at midnight?

I seriously doubt it, seeing as the tax credit extension already hasn't had nearly the effect the first credit did last fall.

In the run-up to the previous deadline, we saw annualized sales volume rise to nearly 6.5 million units. Volumes then tanked to 5m units by January and were only up to 5.3m by March. I doubt we're going to get back to 6.5m by April. All this says is that demand was pulled forward, and there just aren't that many buyers left who are buying solely because of the credit.

Most experts I talk to, including the Realtors' own economist, believe we may see another dip in sales and prices before we are really on the road to recovery. Remember, Spring is historically the busiest market, and we'd probably have seen some bump, tax credit or not. And it's not like the government is gone from housing entirely, given that the $75 billion mortgage bailout is stemming some of the foreclosure crisis, and Fannie Mae is still offering 3.5% back when you buy one of their foreclosed properties.

Housing today is dependent on financing and confidence, and both of those are hanging by a thread.

Frankly I’m glad to see the tax credit go, because maybe now we can see the housing market's true colors, without excuses.

Questions? Comments? RealtyCheck@cnbc.com

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  • Diana Olick serves as CNBC's real estate correspondent as well as the editor of the Realty Check section on CNBC.com.

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