The purpose of this post is to help Sellers better understand how the expiration of the Home Buyer tax credit can impact the sale of their home or investment property. By default, Buyers will do well by also reading this post.
The Home Buyer Tax Credit ends on November 30, 2009. This factor alone will negatively impact the demand for your home. Further, the mere existence of the Tax Credit constitutes a market in and of itself. This sub-market, if you will, has had and will have many impacts, positive and negative, on the overall real estate market. There are two I believe to be most impactful.
One, some buyers, without the availability of the home buyer tax credit, would not be buying, period. Statistics say, 350,000 closed transactions in 2009 are a direct result of the Home Buyer tax credit. Two, seasonally the real estate market is at a close (Minnesota). However, it has been temporarily extended thanks to this Government program. Nonetheless, make no mistake, in 30 days, the overall seasonal market will most certainly resemble that of historically slowing sales.
So, please review the Top 10 list below. If you find yourself saying, "Hey, I know someone in this situation" (maybe you!), have them contact me. I can help. steve@stevealbers.com Mobile: (763) 229-9067
Top 10
2. Short Sales and Foreclosures account for more than 40% of the transactions in our Twin Cities market. These transactions are less likely to close. If they do, 45 days is a very optimistic time frame. If you are a Seller of a lender mediated property, be sure your Agent knows how to manage these complex transactions. steve@stevealbers.com Mobile: (763) 229-9067
3. Reduction in demand ensures pricing strategy to be more crucial than ever. If you do not have an agent and your home has languished in this market contact a Realtor today! You need the expertise of a professional that knows how to analyze your market, the impact of government policies and programs, the impact of the economy, and beyond. This is no time for part timers, real estate agents included! steve@stevealbers.com Mobile: (763) 229-9067
4. For those Sellers who have hired an agent, help them do their job. If you've been counseled to price your home below its current price, staging is set, marketing is set, location is good, and buyer traffic is low, you are priced too high! The first three weeks of a listed property are the most crucial. There is a reason they have been clear and confident with regards to an appropriate price of your home or investment property. This is what we do.
5. Reality Check! Unless our government decides to extend the Home Buyer Tax Credit program, this "false" market will be gone in one day! This dramatic impact on the overall market will immediately strengthen the impact of more traditional factors such as inventories, interest rates, consumer spending, employment, and future government policy.
6. Inventories are down. Home builders have been very good in managing their inventories, offering incentives to buyers, building less, and downsizing (not always positive, i.e., employment). However, recently they have become less aggressive in these efforts. Building has begun to tweak upward over the last quarter. Further, the stock market has been good to builders over the last 6+ months. No doubt, these companies are chomping at the bit to ramp up inventory as a result of improved balance sheets. Like monetary policy this factor is a delicate one and should be monitored closely.
7. Interest rates remain at historical lows. Clearly rates are more likely to move upward vs. down. Further, their eventual upward climb is more likely to be sustained as record level government spending continues to devalue the dollar.
8. Elevated interest rates and record consumer saving levels do not only affect the housing market. These factors will and have certainly effected large purchases such as vehicles, home improvement, and business infrastructure. These factors will continue stifle the appeal of expansion to individual consumers and businesses, a like. On a side, I still believe the Enron’s and Tyco’s of the world, tech crash of 2001, as well as, the unforgettable and tragic events of 9/11, compelled fortune 500's to streamline operations, offer transparency, and curb speculative spending on inventories and within the stock market. This may help to preempt a prolonged economic recovery locally, nationally, and globally. Time will tell.
9. Unemployment nationally is at 9.8%. Over the last 18 months, when asked about our real estate market, I have said the employment rate will absolutely drive the recovery of our real estate market. It is important to know, unemployment is also driven by local economies. So, if you're a seller, pay attention to your economy. Is there diversity? One big industry employing 60% of your local work force is dangerous. Look at Detroit and the impact the auto industry, among other factors, had on the housing market.
10. No one, not even congress, can predict future government policy. In a recent blog, http://tiny.cc/ECj7l I do my best to offer a centrist perspective on our government's approach to policy, as well as, thoughts on how we can help to influence their approach. Let me know what you think.
In short, I hope this information is of value to you. Further, I really hope I've provided clarity regarding the many, many factors that exist when determining the appropriate price of your home or investment property. All of these factors will impact the negotiation process, as well. Stay tuned! In the interim, as always, please contact me with any thoughts and questions you may have. I am here as a resource to you and yours.
Kindest Regards,
Steve M. Albers, REALTOR®, ABR® , CDPE©
Stephenson & Albers Real Estate Team steve@stevealbers.com avenuesandacres.com WordPress Weblog