Chattanooga area house sales will take a plunge this month to 2001-02 levels following the expiration of the homebuyers tax credit, Chattanooga Association of Realtors officials said.
“Like cash for clunkers, you see sales go way up, then drop way off,” said Randy Durham, the group’s president.
Dr. Bruce Hutchinson, professor of economics at UTC, said a plunge in home sales and values is to be expected following the end of the subsidy, and is in fact an important part of the recovery.
“They’ve tried to help people hold on to their homes, but what it has done is kept home prices artificially higher than they should be,” Hutchinson said. “They’re papering over the reality, that those home prices are lower than what they’re being listed as.”
Another possible reason for the decline in buyers could be due to consumers having moved up their house purchase timetable to get the temporary tax credit, effectively stealing buyers from July to bolster June’s numbers, he said.