Atlanta Real Estate Blog

The Housing Market's "Dead Cat Bounce"

When the comparison numbers came in for the month of June, 2010, many real estate industry watchers were elated at how much home sales had increased versus the prior year.  They claimed that we must be in a major turnaround cycle =>  the great real estate recovery.  Certainly the gains were impressive - it's rare to see positive comparisons with 20% or more growth.

In the stock market, when stock prices take a major fall, stock watchers look for a rebound in prices after the major fall.  They call this a "Dead Cat Bounce".  The phrase comes from the idea that  "even a dead cat will bounce if it falls from a great height".  The catchphrase has been used on Wall Street for many years.

Two trends converged to make the recent rally in home sales happen.

1) Those buyers who were under contract by April 30 had to close their sales by June 30th or lose the $8,000 or $6,500 tax credit.  This windfall is over and Congress appears unwilling to create any new tax credit/incentive going forward.  This is a one time blip.

2) The latest home sales numbers were compared to the anemic sales of the past year so this one time blip is also not likely to repeat.

That means Realtors will have to lead generate with even greater intensity going forward to find the homebuyers and homesellers who really are motivated to sell and homebuyers who are financially prepared to buy in this "new normal" real estate market.

Tags: June 2010 rebound in home sales, Housing Tax Credit, Congress, poor comparison data from previous year, homebuyers, homesellers, ATLShortSales.com.