Homebuyer Incentive Boosts Home Sales
Thought I would share with you an article from yesterday's Greeley Tribune.
Credit Boots Home Sales
Federal homebuyer tax credits provided a much-needed shot in the arm to an ailing real estate industry last year, and it promises to boost the area's immunity to the economy for at least the first few months of 2010, area real estate agents predict.
But there likely won't be a real housing turnaround this year.
“This year, we've just been bumping along the bottom,” said John DeWitt, managing broker with ReMax Alliance in Greeley. “2010 will probably be a little better but more of the same, even with the (federal tax) credit. That will help us. Interest rates are still low, but that tax credit is definitely going to help things into spring.”
In all, buyers purchased 1,428 homes in the Greeley and Evans areas last year, 2 percent shy of 2008, which was the year many in the industry say the market bottomed out. The condo market, on the other hand, grew more than 26 percent last year. With their lower prices, those sales are likely a product of the federal tax credit for homebuyers, agents say.
That credit helped double sales of homes under $100,000 last year to 84 in 2009 from 45 the year before, reports Chalice Springfield, managing broker of Sears Real Estate in Greeley.
“We'll continue to see strong numbers in first-time homebuyer range because we've always been the affordability community,” said Springfield of what to expect in 2010. “We even have some new construction stuff with pre-sales. There may be a few even (building) permits started. I'm kind of excited to see it come back, but don't think we'll see a huge boom. We'll slowly recover. It will not happen overnight like they were” in the early part of the decade.
Greeley's real estate market essentially tanked in the past couple of years after some incredible highs. As an example, the market was performing so well from 1998 to 2004 that there were easily more than 1,000 homes on the market at any given time for sale. In 2004, the city of Greeley issued a high of 706 residential building permits, and there were 1,845 homes sold that year.
By the end of 2009, there were about 500 homes on the market in Greeley, including a host of tough-to buy short-sale properties and foreclosures; the city only issued 46 residential building permits, as well.
The market now is varied, with many issues that still have an effect on the market:
• Foreclosures are rising, but there are only 57 foreclosed properties in the Greeley/Evans inventory. Part of that reason is that homeowners facing foreclosure have four months to get out of foreclosure before their properties go to sale.
• There are only 113 short-sale properties on the books now, but they've become increasingly hard to unload, given their uncertain timing. Lenders have typically held out on these properties, waiting for better offers, which could extend the homebuying process for months.
• Inventory of homes on the market is down to about 370 if you take out foreclosures and short sales, giving buyers a lot less to look at. Still, inventory in the $200,000-and-under market — the price range most buyers want in this area — is down to about 200.
“Frankly, we could handle 300-400 homes hitting market overnight,” said Wayne Kohl, an agent with Re/Max Alliance in Greeley. “We have buyers ready to go. They're qualified and ready, but we can't find them the house they're looking for.”
Factor in the looming deadlines to get those federal tax credits — buyers must be under contract by April 30 and close by June 30 — with impending interest rate hikes, which are expected this summer, and real estate agents say buyers better act fast.
“I think people will look back and say, ‘I wish I would have taken advantage of the market or bought an investment or first house,” Springfield said. “This is that time. This is it.”
At the same time, with inventories so low, now may be the best time for sellers to pull the trigger and put their existing homes on the market.
The federal credit, $8,000 for first-time homebuyers, and $6,500 for existing homeowners in their homes for at least five consecutive years out of the past eight years, is good on all homes under contract by April 30. Interest rates are expected to spike shortly thereafter as the Federal Reserve System will stop buying mortgage-backed securities, Kohl said. Even three-quarters of a percent can reduce the amount of mortgage a buyer can get and keep a comfortable monthly mortgage amount, Kohl said.
“If your comfort level is around $1,200 payment, that would be $200,000 home under current interest rates ... let's say June comes and interest rates are at 6 percent, you now would qualify for $180,000 house, instead of $200,000,” to keep the same mortgage payment, Kohl said.
Agents say the market is stabilizing, as evidenced by the shrinking inventory, which means demand will go up.
“Our phones have been ringing off the hook the last two weeks because people are feeling things are happening,” Springfield said.
Source: Greeley Tribune
Real Estate statistics 2009
Town Single Family Home sales Avg. Days on Market Condos/Townhome sales Avg. Days on Market
Greeley 1,428 (-2.1%) 100 177 (26.4%) 123
Fort Collins 2,239 (-5.1%) 110 618 (-16.3%) 121
Loveland 1,297 (-6.7%) 128 164 (6.5%) 113
* Percent change is from 2008.
Source: Information and Real Estate Services via Sears Real Estate
Nationwide sales
Nationwide sales of new single-family homes in December 2009 fell 7.6 percent from November and declined 8.6 percent from December 2008, to 342,000. For the full year 2009, new home sales fell 22.9 percent from 2008.
Source: Economics and Statistic Administration
Homebuyer credit expanded, extended
The Worker, Homeownership and Business Assistance Act of 2009, signed into law on Nov. 6, 2009, extends and expands the first-time homebuyer credit.
Under the law, an eligible taxpayer must buy, or enter into a binding contract to buy a principal residence on or before April 30 and close on the home by June 30. For qualifying purchases in 2010, taxpayers have the option of claiming the credit on either their 2009 or 2010 return.
The law also:
* Authorizes the credit for longtime homeowners buying a new principal residence.
* Raises the income limitations for homeowners claiming the credit.
For more information, go to http://www.irs.gov/newsroom/article/0,,id=215791,00.html.
Source: IRS.gov