This drop may not come to pass, according to an economic researcher. The number of sales of newly built homes was high, largely due to the Federal Tax Credit for Buyers, up through the Tax Credit deadline of April 30. May, by contrast, showed a significant drop in the sales numbers. However, if one notes the average number of sales over the prior two months or so, the drop does not seem to be so meaningful.
A recession is probably not going to happen should there be a further decline in the housing market, although it may slow economic recovery.
On the positive side, consumer spending is improving, and investments and exports are strong. These are indicators that the economy is strong enough to withstand any further issues with the housing market.
The housing market in San Diego may well recover ahead of those in the rest of the country, as the housing predicament began earlier here and may well rebound sooner.
As the San Diego area has much higher priced homes than most of the rest of the country, the impact of the Federal Tax Credits was probably less here. When one is buying a lower priced home, a tax incentive of $8,000 has more enticement. There is not so much incentive if one purchases a home that is above $500,000.
Homes that cost $600,000 or more may prove to be a bit of a drag on the market as it is much more difficult to qualify for mortgages, and the so-called "Jumbo" mortgages are much more expensive, thus reducing the number of purchasers for these properties.
Alright, now it's time to begin the grilling and enjoy the day. Happy 4th of July everyone!
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