Last Updated Oct 14, 2009 12:30 PM EDT
Two months, 19 days. That's when the $8,000 first-time home buyer tax credit expires.
The real question is this: What will happen to the real estate market when the tax credit ends?
Realtors, mortgage bankers and brokers, appraisers and millions of others who make their living from the purchase, sale, repair, upgrading, staging, and furnishing of our homes are pulling out their hair wondering what Congress will do in these waning days of the tax credit.
While the tax credit doesn't expire until November 30, 2009, effectively, the tax credit ends in 19 days, on September 30th. That's because after a couple of years of housing crisis hell, the capacity to finance and close a crushing amount of loans at the end of the month has been diminished dramatically.
Across the U.S., title and escrow companies have laid off their closers - these are the people who actually make a closing happen. They get the paperwork, make sure all of the escrow instructions have been followed, make sure the title insurance is in order and get the parties to the table. Many title and escrow companies have simply gone out of business.
My husband, Sam, is a real estate attorney working in Chicago. Back in the flush days, he and all of the other real estate attorneys would essentially set up shop at the downtown title companies, vast open floors of major office buildings where hundreds of people worked getting closings done. On the last day of the month (a financially-advantageous day for closing on real estate), title companies would put out sandwich spreads as attorneys, closing agents, buyers and sellers ran from room to room getting their deals closed.
Today, the vast halls of these once prosperous businesses are like morgues. Half the offices (or more) are empty and dark. Many of the experienced, long-employed closers have left. The few who have their jobs scramble to get the few deals done.
But there are no more lunches on the last day of the month. There's just not enough business.
While it's clear that last year's $7,500 repayable first-time home buyer tax credit started the ball rolling with sales, it's this year's $8,000 non-repayable version that's kicked the housing market off the bottom. The turnaround started just as the tax credit was announced - hardly a coincidence.
But what will happen when it expires? The housing market looks like it's growing again - which is why Congress might not do anything. Fearful of their voters' dismay at the exploding deficit, they might decide to let it ride and allow the $8,000 first-time home buyers tax credit to run its course and go out with a bang on November 30th.
On the other hand, next year is an election year. And what's better than announcing another $8,000 gift for the housing industry that will help float all homeowners' boats? That way, you only tick off the 35 percent who still can't afford to buy - and the millions of homeowners who are falling into foreclosure because there are now 7 people applying for every available job.
My armchair economist sense is that the economy isn't as green as the government would like you to believe. Sure, Wall Street is making money - good for them. But when designer Vera Wang says that in 40 years she's never seen women afraid to buy anything at any price, you know that deep down, way below the surface, the American consumer is feeling a whole lot of pain.
And when people are nervous about money, and wondering how they will feed, clothe and medically insure their families, they don't go out and buy houses. Even with today's 5 percent interest rates. Even with home prices down by 30 to 40 percent.
Which is why the housing industry is doing the full-court press to get an extension and an expansion of the $8,000 tax credit. The truth is, the housing industry doesn't want to find out if it is ready to stand alone.