Uncharted Territory- the End of the Tax Credit

The end of April marked an historic event.

Think about it.  Never before in American history has there been a homebuyers' tax credit.  On April 30th, it expired.

We are in uncharted territory

If you were planning on buying your first home, or even replacing the home that you had lived in for 5 of the last 8 years, you would get FREE money from the government if you were under contract by the last day of April.  That contract would have to close by the end of this month to qualify for the tax credit.

So, what impact will this have on our market?  No one actually knows.  The first deadline for the credit was scheduled for the end of November, 2009.  Eager first time homebuyers rushed to the closing table to make the November 30 deadline- in spite of the holiday weekend that bumped right into the deadline.

This time, however, the impact seemed slightly less notable.  Many houses went under contract well before the April 30 deadline, and closings were spread out over April, May and June.  There is speculation that some home sales were "borrowed" from the coming months because of the tax credit, and this certainly has some merit.  

Meanwhile, showings of for sale properties dropped.  If you are trying to sell a home, you have seen this effect.  It's time to sit tight and have patience.  

As I said, we are in uncharted territory.

How Many Showings Does it Take?

When selling your home, one of the "moving targets" is the number of showings to expect.  Not surprisingly, the number of showings goes down during the holidays and during cold winter months when the weather is unpredictable.  But different price points will also experience different levels of activity.
Following is a breakdown by price level of home many showings per month we experienced in the Denver Metro market for the first quarter of 2010:

• Overall, the number of showings per month for all price categories was 8.7 per home.
• Homes under $250,000 saw an average of 10.5 showings per month, with the $50k-100k range seeing the highest number of showings per month at 15.
• Homes from $250k-300k saw an average of 7.4 showings per month.  Homes from $350k-400k were at 3.7 showings per month.
• Homes in the higher price ranges, from $400,000 up, saw an average of 4.8 showings per month.

The good news for those selling homes in the $250k-400k price range is that the number of showings increased year over year: from 4.7 in 2009 to 6.1 for 2010.  Homes above that range increased from 3.4 to 4.8.  Homes priced in the lower ranges held steady at 10.5 showings per month.
Buyers are getting back out there, which is good news for all homeowners.  With renewed interest and activity in residential real estate, we will see a ripple effect throughout the economy.

Pending Home Sales Down- Not the End of the Trend?

NAR reported yesterday that pending home sales were down by 16% in November over October.  After steady increases, this may come as a bit of a shock to some consumers.  To others, it may seem like the inevitable fall after so many months of gain.
But, what does it really mean?  The Pending Home Sales Index is a forward-looking indicator of how the real estate market will be doing in the next couple of months.  It measures how many sales contracts have been signed with the intent of closing, usually within the next 30 to 45 days.
Does this drop mean that the market is drying up?  Just when recovery was on the horizon, are consumers baling out?
Hardly.  A closer look at the numbers reveals that buyers are still very interested in getting that home.  While the numbers dropped for November over October 2009, they are still 15.5% higher than November of 2008.  And those of us lucky enough to live in the Western region (that's you, Colorado) aren't faring bad at all: the pending home sales dropped by a mere 2.7%, still 21.4% higher than November of 2008.

Want to know more about what's happening in YOUR neighborhood?  Contact me today for a thorough look at the trends on your block.