Real Estate News Round Up
The $8,000 first time home buyer tax credit is in the news. The current credit is due to expire November 30, 2009 and the National Association of Realtors estimate 1.8 million home buyers will have used the credit by the end of November, including 355,000 who would not have purchased a home without it.
Congress is now debating whether to extend and perhaps even expand the credit to all home buyers. House Speaker Nancy Pelosi said in a recent news conference that an extension is under consideration. “And the question is, would that be just first time homeowners or would you open it up to other purchasers of homes”, she said. Mark Zandi, chief economist for MoodysEconomy.com is among those who favor extending the credit and making it available to all homebuyers. “The most fundamental argument for the credit is that nothing works in the economy if housing is falling,” Zandi said. “The credit is a good insurance policy. It’s vital to stem the housing price decline”.
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Mortgage activity has dropped slightly and mortgage rates have increased slightly in the last week according to the Mortgage Bankers Association weekly survey. Mortgage applications decreased 1.6% on a seasonally adjusted basis and refinance applications were 67.4% of total applications. 30-year fixed rate mortgages increased to 5.01% from 4.89%.
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Economic forecasters predict that 2010 will be the first year since 2005 that housing will contribute to the growth of the U.S economy, according to a survey released by the National Association for Business Economics. Home prices are expected to increase 2% next year, but forecasters don’t believe this increase will discourage homebuyers. More than 80% of economists surveyed by NABE think the recession is over and recovery has begun, but they expect the expansion to be slow because unemployment persists.
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The Chief Economist of the Mortgage Bankers Association, Jay Brinkmann predicts sales of existing home will rise 11% in 2010 and new home sales will climb 21%. “We still see a concentration in the lower end of the market,” Brinkman said. “The entry level homes are in demand.”
David Stevens, commissioner of the Federal Housing Administration predicted that mortgage rates will rise to 5.6% by the end of 2010, though not enough of an increase to discourage a 12% increase in mortgage applications next year.
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The American dream of homeownership is still a good bet, financial advisors say. Despite the downturn in the last couple of years, homes have still appreciated an average of 4% a year since World War II. Plus, it’s a leveraged investment; a 10% down payment yields a 1,000 percent return if the price of a home doubles. There are also valuable intangibles. Owning a home provides independence, security, community and a roof over the owner’s head. No one can say that about investing in stock.
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Last Sunday we reported on the September and third quarter local real estate sales and there are a couple of updates. A few late sales increased the total for the month to 243 closed sales which means we actually had a 0.4% increase in sales for the month. This increase is just the second one in the last two years with the other increase also being in the third quarter. In addition, the average selling price for the month has been corrected to $247,864, a big improvement over the $243,069 reported last week. For the third quarter sales totaled 912 homes, a slight 1.6% decline compared to last year. Prospects are good for improved sales over the next couple of months as the scramble is on to take advantage of the $8,000 first time homebuyers tax credit which is still due to expire on November 30, 2009.