The pessimists were right: Chicago needs those housing tax credits back

There were two sides fighting it out before April 30: One group said that the demise of the federal government’s housing tax credits — up to $8,000 for first-time home buyers and up to $6,500 for move-up buyers — would put a screeching halt on Chicago-area home sales. The second group said, no, the Chicago-area housing market was strong. It didn’t need the tax credits to continue its sales gains.

It appears that the first group was right. And, yes, that’s a real drag.

The National Association of Realtors on July 1 released their index of pending home sales. You can read about this index in this story on Chicago Breaking Business, but what you need to know is this: New sales contracts on home purchases fell sharply in May, dropping 32.1 percent in the Midwest and 30 percent nationally.

This means that fewer people are in line to close home sales in the coming months. It also means that in the first month after the expiration of the federal housing tax credits — both expired at midnight on April 30 — fewer people rushed out to buy homes.

In other words, the pessimists were right. Just as we all knew they would be.

It’s that kind of economy, right?

Leave a comment