According to some indicators, existing home sales in New Jersey dropped in May as demand for homes dropped in the wake of the now expired federal home buyers tax credit. According to a story recently published in the New York Times, sales were down in each of nine New Jersey counties that were analyzed by the Ottea Valuation Group. Overall, there were 23% fewer sales in May of 2010 versus the same month last year.
This should not be surprising to anyone. The home buyer tax credit was designed to stimulate buyer activity in the market, which anyone in the real estate business knows it did successfully. The program did, however, have a finite end date, and buyer activity peaked as this date approached. It is only logical to infer that a large number of transactions would occur in the days leading up to the deadline, and that those buyers who elected not to take adavantage of the credit would continue to look for homes at their own pace in the weeks that followed.
The bigger question is not what happened in May, but rather what will happen in June and the months after. Will the market continue to show some strength after a one month dip as buyers move more confidently into the market? Or will the market continue to trend back downward as buyers remain on the sidelines? The numbers for June, not May, will start to answer that question.