“It is very hard to make predictions. Especially about the future” –Yogi Berra, former Yankees Hall of Fame Catcher
2009 ended much stronger than it started. Unit sales were up in virtually every market in the country and while prices are still trending down, inventory shrinkage in the entry level points to price firming. Inventories in the mid- to upper-price brackets show that prices have a ways to adjust (that means downward).
The tax credit walloped housing the fourth quarter with November 2009 unit sales up 42.9% over November 2008. December won’t be quite as robust but will still be better than December 2009. We expect the same in January and February with small increases in unit sales over those months last year. Then will come the second explosion with the expiration of tax credit too. Sales in the April to June period should be substantially above the same months of 2009.
The second half of 2010 should be quieter in terms of month-over-month increases in unit sales. Depends too on where your business is. If your business is in foreclosures and entry level housing 2010 could be your best year ever. If you are focused on the upper price brackets 2010 will another tough year.
Housing sales are a function of demand. The growth of households, of family incomes and employment are the most important factors. Don’t get fooled by thinking that Americans are going to defy these basics and go back to buying homes as if they were flipping stocks. People need a place to live, its that simple. While in the short term households will make decisions based on tax credits or great values in home prices and mortgage rates, only a change in need will drive demand. And it turns out that the demand is fairly static--about 5% of all households a year will purchase a home.
We are bullish on housing in 2010 not because we believe it will be hugely better than 2009 but because the country continues to grow and people will need a place to live. A certain percentage are going to buy a home because their needs changed. Once all the tax credits have expired and the lowest interest rates you will ever see pass, the underlying demand will still be there and families will go back to buying homes.
For those who made it this far, take heart. It only gets better from now on.
Sunday, January 17, 2010
Friday, January 8, 2010
Wednesday, December 9, 2009
Thursday, November 19, 2009
Monday, October 26, 2009
Big Rebound in Existing-Home Sales Shows First-Time Buyer Momentum
Existing-home sales bounced back strongly in September with first-time buyers driving much of the activity, marking five gains in the past six months, according to the National Association of Realtors®. Existing-home sales–including single-family, townhomes, condominiums and co-ops–jumped 9.4% to a seasonally adjusted annual rate of 5.57 million units in September from a level of 5.10 million in August, and are 9.2% higher than the 5.10 million-unit pace in September 2008. Sales activity is at the highest level in over two years, since it hit 5.73 million in July 2007.
Lawrence Yun, NAR chief economist, said favorable conditions matched with a tax credit are boosting home sales. “Much of the momentum is from people responding to the first-time buyer tax credit, which is freeing many sellers to make a trade and buy another home,” he said. “We are hopeful the tax credit will be extended and possibly expanded to more buyers, at least through the middle of next year, because the rising sales momentum needs to continue for a few additional quarters until we reach a point of a self-sustaining recovery.”
Even with the improvement, Yun said the market is underperforming. “Despite spectacular gains in the stock market, principally from the financial sector recovery, most of the 75 million home owning families have more wealth tied to their homes. Home values could soon turn consistently positive and help the broad base of middle-class families, but we are not there yet,” he said. “We’re getting early indications of price stabilization, but we need a steady supply of qualified buyers to meaningfully bring inventories down and return us to a period of normal, steady price growth and to fully remove consumer fears, which would then revive the broader economy. Without a firm foundation for middle-class wealth recovery, the post-recession economic growth likely will be one of the weakest in U.S. history.”
Lawrence Yun, NAR chief economist, said favorable conditions matched with a tax credit are boosting home sales. “Much of the momentum is from people responding to the first-time buyer tax credit, which is freeing many sellers to make a trade and buy another home,” he said. “We are hopeful the tax credit will be extended and possibly expanded to more buyers, at least through the middle of next year, because the rising sales momentum needs to continue for a few additional quarters until we reach a point of a self-sustaining recovery.”
Even with the improvement, Yun said the market is underperforming. “Despite spectacular gains in the stock market, principally from the financial sector recovery, most of the 75 million home owning families have more wealth tied to their homes. Home values could soon turn consistently positive and help the broad base of middle-class families, but we are not there yet,” he said. “We’re getting early indications of price stabilization, but we need a steady supply of qualified buyers to meaningfully bring inventories down and return us to a period of normal, steady price growth and to fully remove consumer fears, which would then revive the broader economy. Without a firm foundation for middle-class wealth recovery, the post-recession economic growth likely will be one of the weakest in U.S. history.”
Friday, March 20, 2009
Do You Want $8,000?
The credit is designed to give “first-time homebuyers” a leg up on the markets—but wondering what exactly a first-time homebuyer is has caused some headaches.
Here are answers to the top three FAQs:
Q: I bought a home this year, but I already filed my tax returns with the $7,500 credit. How can I get the extra $500?A: Don’t panic—you can file an amended 2008 tax return, using Form 1040X. You’re probably going to want the help of a tax advisor.
Q: I’ve never bought a home before, but my spouse has. Can we get the first-time homebuyers’ credit?A: Married taxpayers must both pass the qualification of not owning a principal residence in the last three years in order to get the credit.
Q: I’ve purchased a home in the past, but sold it four years ago, and I’ve been renting ever since. If I buy another house, can I get the credit?A: Yes! The credit is for first-time homebuyers and people who have not owned a home within the past 3 years.
Here are answers to the top three FAQs:
Q: I bought a home this year, but I already filed my tax returns with the $7,500 credit. How can I get the extra $500?A: Don’t panic—you can file an amended 2008 tax return, using Form 1040X. You’re probably going to want the help of a tax advisor.
Q: I’ve never bought a home before, but my spouse has. Can we get the first-time homebuyers’ credit?A: Married taxpayers must both pass the qualification of not owning a principal residence in the last three years in order to get the credit.
Q: I’ve purchased a home in the past, but sold it four years ago, and I’ve been renting ever since. If I buy another house, can I get the credit?A: Yes! The credit is for first-time homebuyers and people who have not owned a home within the past 3 years.
Subscribe to:
Posts (Atom)