So what’s going on in the housing market, you ask? Let’s take a look. There’s actually plenty of good news. No, really, we don’t have to use air quotes or anything. According to The National Association of Realtors, existing home sales rose nearly 14 percent in the fourth quarter of 2009 over the third quarter, and were a whopping 27 percent higher than the fourth quarter of 2008.
The most important factor was the first-time homebuyer tax credit. It was so successful that the NAR was able to lobby for its extension and expansion. Now even existing homebuyers can get a tax credit, if they buy before April 30, 2010 (or close before June 30).
Home prices also rose, which is good news for sellers of course, as the number of foreclosed homes on the market had depressed prices across the board. The NAR says that because purchasers are taking out 30-year conventional, conservative mortgages and avoiding adjustable rate products, the recovery should have staying power.
The real estate market isn’t out of the woods yet. There are still plenty of distressed properties out there, and some markets are much worse off than others. California, Nevada, and Florida were among the hardest hit, and there are whole neighborhoods that are standing virtually empty, which brings up a whole host of other problems. Squatters move in, vandals strip the house of wiring and other valuables, and the integrity of the structure begins to fall apart. Houses are meant to be lived in.
Then there’s the domino effect. Foreclosures affect town tax revenues, which affect schools, infrastructure, and services.
So when the NAR says things are looking up, it’s cause to celebrate. When they say the recovery in residential real estate looks to be a lasting one, we can cheer a little louder. We still have a long way to go before some markets can join the party, but at least we’re heading in the right direction.
Indeed we are not out of the woods yet. We should see a good test this year when the tax credit goes away.
Patrice, It’s the NAR’s job to trumpet good news. I keep good track of sales statistics for my area. There has been an increase in the number of sales from a year ago, but home prices are down from a year ago. I think it is safe to say that the worst is over, but prices are not near to firming up. Short sales and foreclosures are going to be with us for 2 more years and are are going to keep home prices depressed. What will turn this around is jobs. The country lost jobs at the rate of 300,000 -400,000 per month. We will not gain them back at that rate. For much of the working class, this is the “lost decade”. Mortgages and equity evaporated along with retirement savings. It will take many people a decade to get back just to even because of this financial crisis.
Home prices also rose, which is a good news for me,thanks for the info this blog helps alot
I am not sure if I agree. I still feel that sales will drop again and this will be the time to buy and hold! How about contacting owners who are about to go into foreclosure to try and buy their house and save their credit, it creates a win-win. You could also pay their arrears get them to move to an apartment and then do a lease option. Still a great buyers market!!
Cheers