The Tax Credit
What is the Spring Market? When does it Start? Will it be a Good Market or a Bad Market? These are questions asked both by, Buyers and Sellers as well as Realtors.
Springtime is traditionally the busiest season in real estate for Buyers, Sellers, and Realtors. This is when new buyers flood the market generating new vitality into the market. Fresh properties enter the market along with others that were taken off the market at the end off last year. This always results in a buying and selling frenzy that is fueled by new money and increased competition in the marketplace.
Usually, the unofficial beginning of the spring home buying season starts after the Super Bowl, which would have been very early this year on February 7, 2010. The home buying season however, has already started, thanks to the expanded first-time and step-up homebuyer tax credit. In other words, the Tax Credit is igniting the early Spring Selling Season and is getting people off the couch and out looking already.
This year is truly a buyer's arena. In 2010 several factors affecting the current housing trend show the real estate market forecast to be much busier than usual over the next several months, so discerning sellers should take notice. This year, in particular, the housing market is predicted to be very active with a positive real estate market outlook and here's why. The 4th quarter of 2009 saw a huge increase in home sales nationwide, caused in part by the expiration of the Federal Housing Tax Credit for first-time homebuyers. This helped to clear the increasing inventory of unsold homes, many of which were foreclosures and short sales that had been helping to foil home prices.
Now that the Federal Housing Tax Credit has been extended into April and includes not only first-time home buyers but step-up buyers as well, there will be thousands more Americans rushing to be under contract before the April 30, 2010 deadline. This means buyers need to be under contract with their purchase by April 30, 2010 and the home needs to close by June 30, 2010.
Home prices began to stabilize during 2009, and home sales showed some signs of encouragement. We expect more of the same in 2010, although there will be some additional headwinds: higher rates and expiring tax incentives will likely create a lull during the summer months.
Also, just this week the Federal Reserve announced that it intended to keep key interest rates at historical lows. It’s highly likely that the Fed will be “on hold” for rate changes during most of 2010. The Fed will have to try and play Goldilocks…getting it “just right” for the amount of time they leave interest rates at these historically low levels. Hike rates too soon, and it could derail an already fragile US economic recovery. And let’s remember that the government has literally spent trillions to try and provide stimulus to spark that economic recovery. And the Fed will likely err on the side of keeping rates lower longer, as they certainly would not want to send the US into a double-dip recession, making the stimulus appear to be a wasted effort. And the Fed will have an incentive to keep rates low, so long as unemployment shows no sign of improving. But there is a very big risk in keeping rates too low too long…and that risk is inflation.
While inflation doesn’t appear to be a present concern, it can be very difficult to control once it takes hold. And its effects can be very damaging. Inflation is the enemy of all Bonds – and if it does take center stage, the Fed will have to hike rates very aggressively to attempt to keep it at bay.
The bottom line; if you plan to buy or sell your home in 2010, earlier in the year will be much better than later. On one hand, sellers will see a slight increase in sales prices due to the influx of fresh buyers and the rush to beat the April 30, 2010 deadline for the tax credit. However, Buyers will be able to take advantage of historically low interest rates before the Fed raises them and can cash in on the Federal Housing Tax Credit, not to mention having a much greater selection of homes listed for sale.
"Location, location, location" used to be the real estate motto, this year we are more likely to hear "Timing, timing, timing" to be the motto!
The following words come from our 2010 MAR President, Kevin Sears.
WALTHAM, Mass. – January 26, 2010 – The Massachusetts Association of REALTORS® (MAR) reported today that median sale prices of single-family home sales and condominiums were each up 10.9 percent compared to December 2008. This is the first time prices have gone up by double digits since 2005. Home sales were up 14.6 percent compared to the same time last year while condominium sales were up 31.7 percent. With six straight months of sales increases, 2009 finished up 4.1 percent while prices were down 6.8 percent compared to 2008.
Springtime is traditionally the busiest season in real estate for Buyers, Sellers, and Realtors. This is when new buyers flood the market generating new vitality into the market. Fresh properties enter the market along with others that were taken off the market at the end off last year. This always results in a buying and selling frenzy that is fueled by new money and increased competition in the marketplace.
Usually, the unofficial beginning of the spring home buying season starts after the Super Bowl, which would have been very early this year on February 7, 2010. The home buying season however, has already started, thanks to the expanded first-time and step-up homebuyer tax credit. In other words, the Tax Credit is igniting the early Spring Selling Season and is getting people off the couch and out looking already.
This year is truly a buyer's arena. In 2010 several factors affecting the current housing trend show the real estate market forecast to be much busier than usual over the next several months, so discerning sellers should take notice. This year, in particular, the housing market is predicted to be very active with a positive real estate market outlook and here's why. The 4th quarter of 2009 saw a huge increase in home sales nationwide, caused in part by the expiration of the Federal Housing Tax Credit for first-time homebuyers. This helped to clear the increasing inventory of unsold homes, many of which were foreclosures and short sales that had been helping to foil home prices.
Now that the Federal Housing Tax Credit has been extended into April and includes not only first-time home buyers but step-up buyers as well, there will be thousands more Americans rushing to be under contract before the April 30, 2010 deadline. This means buyers need to be under contract with their purchase by April 30, 2010 and the home needs to close by June 30, 2010.
Home prices began to stabilize during 2009, and home sales showed some signs of encouragement. We expect more of the same in 2010, although there will be some additional headwinds: higher rates and expiring tax incentives will likely create a lull during the summer months.
Also, just this week the Federal Reserve announced that it intended to keep key interest rates at historical lows. It’s highly likely that the Fed will be “on hold” for rate changes during most of 2010. The Fed will have to try and play Goldilocks…getting it “just right” for the amount of time they leave interest rates at these historically low levels. Hike rates too soon, and it could derail an already fragile US economic recovery. And let’s remember that the government has literally spent trillions to try and provide stimulus to spark that economic recovery. And the Fed will likely err on the side of keeping rates lower longer, as they certainly would not want to send the US into a double-dip recession, making the stimulus appear to be a wasted effort. And the Fed will have an incentive to keep rates low, so long as unemployment shows no sign of improving. But there is a very big risk in keeping rates too low too long…and that risk is inflation.
While inflation doesn’t appear to be a present concern, it can be very difficult to control once it takes hold. And its effects can be very damaging. Inflation is the enemy of all Bonds – and if it does take center stage, the Fed will have to hike rates very aggressively to attempt to keep it at bay.
The bottom line; if you plan to buy or sell your home in 2010, earlier in the year will be much better than later. On one hand, sellers will see a slight increase in sales prices due to the influx of fresh buyers and the rush to beat the April 30, 2010 deadline for the tax credit. However, Buyers will be able to take advantage of historically low interest rates before the Fed raises them and can cash in on the Federal Housing Tax Credit, not to mention having a much greater selection of homes listed for sale.
"Location, location, location" used to be the real estate motto, this year we are more likely to hear "Timing, timing, timing" to be the motto!
The following words come from our 2010 MAR President, Kevin Sears.
WALTHAM, Mass. – January 26, 2010 – The Massachusetts Association of REALTORS® (MAR) reported today that median sale prices of single-family home sales and condominiums were each up 10.9 percent compared to December 2008. This is the first time prices have gone up by double digits since 2005. Home sales were up 14.6 percent compared to the same time last year while condominium sales were up 31.7 percent. With six straight months of sales increases, 2009 finished up 4.1 percent while prices were down 6.8 percent compared to 2008.
“We can thank the first-time homebuyer tax credit for helping to create six straight months of positive sales to close out 2009,” said 2010 MAR President Kevin Sears, broker/co-owner of Sears Real Estate in Springfield. “One month with a big jump in median prices certainly isn’t a trend, but the combination of increased activity from the tax credit and declining inventory has the ability to keep prices moving up. We need more homes on the market if we are to keep prices stable.”
My final words of wisdom are that 2010 will look better than 2009. But, good economic news is a double-edged sword, as it increases the risk of rising taxes and rates. Many people may not understand the relationship between rates and the economy, so make sure you take advantage of the expertise of your Realtor, your Mortgage Consultant and the experts in this field that can help you with the changing economic climate and your understanding of it. We all want to help you make your home buying experience as stress free as possible.
