2010 Cabot Arkansas Slow Down Theory
On April 30th 2010 the government decided to end the firs time home buyer tax credit. They enforced that buyers must have the home they are purchasing under contract before that date or they would not be eligible for the tax credit. The problem from what I seen down here in the trenches is that March and April was very busy in the Cabot Arkansas real estate market. After April it died, the phone didn't ring and nobody wanted to buy a home. We did still take care of clients that were under contract in April and closing in May, but no new clients.
After that point in the year, the rest of the year was slow. There was an average 70 Cabot homes sold per month from Jan to April of 2010. From May to the end of Dec. there was only an average of 57 Cabot homes sold per month. That is a 19% drop in average monthly home sales after the credit expired.
To take it a step further, people who were under contract in April had to close on their home before the end of Sept. to get the tax credit. So there were still homes closing from April to Sept. that were effected by the tax credit. From Sept. to the end of Dec. the average number of Cabot homes sold per month dropped to 50. Which is a 29% drop from the 70 homes a month average from Jan. to April.
In my opinion, the decline seen in the Cabot real estate market was effected by the expiration of the tax credit. I have a strong feeling that if the tax credit was phased out instead of dropped all at once it would have less of a negative effect. If they would have dropped it from 8K and then a month or two later dropped it to 6K and so on, I feel it would have been better for the real estate market. By slowly phasing out the tax credit it would have allowed buyers to continue to buy and slowly slow down, instead of a sudden drop in home sales.
Next I am going to give a 2010 for the Central Arkansas real estate market.