Im reading a book by Robert Cialdini about the "weapons of influence." One of the major weapons of influence is scarcity and/or artificially imposed deadlines.
In the real estate market, we've recently gone through one of the biggest time periods of scarcity in recent memory, in dealing with the impending expiration of the first time and repeat home buyer tax credits. By imposing a final deadline (scarcity) for receiving the $6500-$8000 the government did a great job of giving the industry an artificial boost.
I personally helped a handful of people who moved quickly to make sure that they were under contract before they lost the chance to take advantage of the opportunity. These are people who had been considering buying and/or selling at some point in the next 12-18 months but decided to do so prior to April 30th to cash in on the incentive. You can see this phenomenon reflected below in the Austin real estate market data through May 2010.
Through April, the number of pending contracts and closed sales increased dramatically while the days on market required to sell a house decreased monthly. Some of that change can be attributed to the natural (seasonal) sales cycles of the real estate market, but much of it is a direct result of the artificially infused buyer/seller motivation.
You can also see that things slowed down a little bit in May which is typically one of the strongest months of the year. It is going to be very interesting to keep an eye on how the data varies year over year in the months of July, August and September. Since a buyer looking to take advantage of the tax credit must close before June 30th to maintain eligibility, the numbers will continued to be slightly skewed through June. After June, the numbers will be more representative of the health of the real estate market in general.
Over the past three weeks, I have seen a significant drop in buyer activity on my listings and in speaking with other Realtors in other areas, the experience has been the same across the board. Most anyone who was going to buy a house and close prior to June 30th, did so before the end of April in order to take advantage of the extra incentive offered.
We are all crossing our fingers and hoping to see an infusion of late summer buyers hit the market in the next few weeks now that school is out and people are aiming to be moved by the beginning of the next school year. Only time will tell.

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