Tax Credit to expire April 2010, what next?

If the recent increase in home sales can be attributed to the first time homebuyer tax credit, what will happen when the tax credit expires? The Seattle Times article “U.S. monthly homes sales surge, but can it last?” discusses the increased home sales and what it means for the housing market. Home sales are up 36 percent from the low point last January, and seem to be rising still. The extension of the tax credit is part of the reason for this increase but I believe low mortgage rates and home prices are also contributing. The amount of home resales nationwide rose 10.1 percent from September to October, the biggest monthly increase in a decade. With increases of this magnitude it is hard to believe that it is solely first time homebuyers creating this surge in home sales. In King County new and existing home sales increased by 10.8 percent, and as seen in my last post many of these sales were in the luxury home market. The extended tax credit is due to expire April 30^th 2010 and there will most likely be another surge in home sales as buyers rush to take advantage of the credit before it is gone for good. The real question is what will happen after the surge? If the source of improved home sales is attributed only to the tax credit then it is likely that sales will drop again after the incentive expires. However, based on the amount of increase and the areas of increase not in Seattle it seems as though first time home buyers are not the only ones spurring the housing market into recovery. This means that when the tax credit expires nothing will have changed for buyers who did not qualify to begin with, and they will continue to take advantage of the low mortgage rates and home prices. Although home sales may decrease some when the tax credit expires, the market should stay relatively stable, and will most likely continue to work its way back to where it was a few years ago.  Click the picture below to read the article which prompted this post.

Increase in Luxury Home Sales

It seems that buyers are taking advantage of the low home prices and returning to the market. This August buyers closed on 5 percent more homes than in August 2008. In the Seattle area however West Bellevue/Medina was the area that saw the most increase in home sales, an area full of luxury homes. The runner up for increased sales was Queen Anne/Magnolia, also considered a luxury home market. These areas have homes that are for the most part too expensive for buyers looking to take advantage of the first time homebuyer tax credit. So if it is not the tax credit, what can we attribute to this sudden increase in sales? As bankers put more and more foreclosed homes onto the market the supply is flooded bringing the median home price down. This coupled with great finance rates has seemed to increase confidence of previously tentative buyers. If demand for homes continues to rise, it will eventually offset the large supply and we should see an increase in the median home price.

Check out the Seattle Times article on the same topic, click picture below

Standard and Poor’s Case-Shiller Home Price Index

 For those of you that have no idea what the title of this entry is referring to, the Case-Shiller Home Price Index is an index that measures the change in value of the U.S. residential housing market. The index tracks this growth by comparing the purchase price and resale values of homes that have undergone at least 2 transactions. This index is an excellent benchmark to use when comparing growth in residential real-estate. Seattle’s current Case-Shiller index is at 149.54 and rising, the last time we were at this value was May 2005. What this means for us is that the Seattle housing market has finally hit bottom, and is trying to work its way back up again. Because of how long it took to get to this bottom, the way back up is also very slow. However, with the extension of the first time homebuyer’s tax credit until April 2010, and other national policies; hopefully the growth will be faster than the decline was. Factors other than the Case-Shiller Index are showing an increase in the Seattle housing market. Check out the top 6 signs your home will increase in value from MSN.com by clicking the picture below.

 

Top Changes

Due to the economic situation of the past few years, we are seeing a big shake up in the market. Many of the longtime friends and builders are no longer operating. They have gone bankrupt or simply just shut down operations. Yet, as bad as it may look, many companies have stayed in business, maybe on a smaller scale, but there none the less. New companies have even begun to arise, showing that there is promise for the future. Luckily, we are seeing improvement in the market, along with some of the other bigger builders, with our four generations of experience helping us survive through the down times. In Seattle alone there are over 15,000 permits sold, showing that there is still a big market. Although housing companies are still in business, it is important that the one you choose to work with is financially viable and sustainable. Many of the top ten builders are betting on “Seattle’s continued growth,” as Murray Franklyn stated, and so are we. We see Seattle as a strong market. We plan on being around as long as any publicly traded company and the benefit is we are locally owned and operated, not a huge corporation. To read more, click here.

First-Time Buyers

Great news! Home sales in King County have improved recently. In fact, in June 2009 they were at their highest since October 2007. This increase can mainly be attributed to the fact that people are finally taking advantage of the homebuyer $8,000 federal tax credit. To be eligible you simply need to be a first time homebuyer, which is defined as someone who has not owned a principal residence for the past 3 years. You can be purchasing a new home or even a resale, so why not take advantage or this great steal? Well, apparently, more and more people are. This is great for the economy and is exactly what the American Recovery and Reinvestment Act of 2009 aimed to do. It is vital to remember that when these first time buyers enter the market, people must sell to them, and move on to something else, creating a never ending cycle of home buying and selling. I am extremely excited about this new life in the housing market, but even more excited that people are finally doing what they should be, they are taking advantage of the tax credit. All types of homes qualify, so I believe everyone can find something that fits them, something that they love. Start your search now! To read more about the raise in home sales, specifically in King County, click on the link below.

http://seattletimes.nwsource.com/html/realestate/2009426109_homesales07.html

Homes on wheels.

What would you think if you saw a 100-year old house rolling down a city street? You can experience this first hand on E. Howell Street on Saturday August 25^th. Two homes are currently located on the Epiphany school’s property in the Madrona neighborhood are being moved to make room for an addition to the school. As you can imagine carting full size craftsman homes down a narrow city street is no small task, especially when beloved neighborhood trees are involved. Trees overhanging the street must be trimmed back a significant amount and some trees must be dug up and replanted after the move. This created a strange controversy over cutting back the much loved trees or demolishing the homes. Neighbors on E. Howell Street were reluctant to destroy the ambiance the trees created, but eventually worked out an agreement with the moving company to ensure the health of the trees. I am very glad that these homes were saved from demolition, not only were two beautiful old homes saved, but all the lumber in the homes was saved from the landfill. Old homes like these have always interested me because my great grandfather was building homes much like the two homes being moved back when he founded Powell Homes in 1909. Some lucky homebuyers got an amazing deal on some great old homes I feel they will really enjoy. It is excellent the school and neighborhood went to the extra effort to save the history that is built in these homes.  To read and learn more about this story visit a link below:

Seattle times July 9^th

Central District News: original, update

Great opportunity for consumers.

I have been happy to see the housing market begin to show signs of life again, as for me it signals an end to this recession in the coming year. But an improving economy also means more expensive consumer goods. An article from Forbes.com titled “10 things to buy before the economy improves” brought to my attention that the low prices and screaming deals we consumers are seeing now are not going to last long. The lack of demand has lowered prices across all markets. Now you’re probably wondering what the ten things are you should buy before the economy comes to life again and prices rise. On the top of the list is a home! Imagine that. Lower home prices coupled with even lower interest rates make for some excellent deals. The article goes on to say that “This may be the best time in a generation to buy a home.” which is definitely something I cannot argue with. Other items on the list included a new car, a vacation, a television, and diamonds. So don’t wait until the economy improves to take that trip to Hawaii or buy that flat screen TV. There is no time like the present, take advantage of the great deals while they last.

 To see the full list click here

 To read the full article click here

More Improvement in Housing Market

Last month I posted about Beacon Hill and Rainier Valley and their improving housing markets(click here to read previous post). This month happily I am posting about several other improving markets. According to the Puget Sound Business Journal Green Lake, Ballard, and North Seattle are all reverting to seller’s markets. Only three months ago everywhere was a buyer’s market, with most everywhere having at least a 6 month supply of homes. This means it would take 6 months to sell all the homes in the area. Now Green Lake has only a 2.5 month supply and North Seattle only a 1.9 month supply. (As of May 2009). The shorter the supply of homes the more demand they have, which in turn makes them worth more. The first time homebuyer tax credit I mentioned in an earlier post has something to do with the upturn in sales. (Remember that this Tax Credit ends in November so don’t miss this amazing opportunity). Once homes start to sell, it triggers market buoyancy and before you know it we will be out of this slump. I believe the market will continue to strengthen in the coming months and throughout the year. As homes sales increase it gives an indication of a wider market recovery across all business areas.

Read the Puget Sound Business Journal article mentioned above. Click Here.

Silver Lining in Housing Bust

The chart above, from a Seattle Times article last month, shows the increase in  neighborhoods affordable to median income homebuyers in King County in the last year. In 2004 almost every area in King County was affordable to the median income homebuyers. As housing prices increased it made many areas unaffordable to the average homebuyer; in 2007 only one area was affordable to the median household income buyer. Although the decline in the housing market has hurt businesses and homeowners everywhere it has also made many areas in King County affordable to the median income homebuyer once again. In 2008 six areas were affordable, a five area increase since 2007. As more areas become affordable again home sales will increase. With the influx of homebuyers the housing market will start to rebound, and homes that dropped in value will start to appreciate once more. Finding the silver lining in any situation is a good skill to have, the housing bust isn’t all bad, it provides excellent opportunities to low income homebuyers. In addition the market is already starting to pick up in some areas, read about it here.

 To read the Seattle Times article this chart was used from click here

Bright Spot in Housing Market

About a month ago an article in the Seattle Times titled “Housing Market Has Surprise Bright Spot” caught my eye. The article talked about the unexpected appreciation of home values in Rainier Valley and North Beacon Hill, two areas Powell Homes has built in since the 1940s. While the rest of the county’s home prices have been declining, these two areas show a bright future ahead. The new Light Rail system near these neighborhoods makes the city, airport, and many other attractions extremely accessible. Rainier Valley and North Beacon Hill are a great example of how a transit system can influence an area in a positive way. Residents hope that the Light Rail stations in their neighborhoods will attract businesses they can walk to, much like living in an urban city, but with the suburban feel. When buying a home, you are not only buying a place to live but you are buying an asset. It is important that this asset will appreciate in value becoming a profitable investment. These two regions are just two examples of markets in the Seattle area where buying a home is a good investment. The recent light rail developments and future developments are promising for the housing market. Anyone looking for a well priced home that will increase in value over the years should look in Rainier Valley and Beacon Hill. Buying a home there is not only a good investment but also a great place to live. The neighborhoods are very diverse and residents say it’s “a great location . . . they like how the community is getting involved in a neighborhood plan to update to address light rail’s arrival”. People looking to buy rentals or even to develop might look to this area because of its surprisingly better market. These two examples of how a transit system or any big change to a community can completely flip the housing market around causes me to look to other areas where similar changes are occurring. What other regions in Seattle are going to see in increase in home prices? Perhaps White Center will see a boost in the coming months. Wherever it is I am sure that Rainier Valley and Beacon Hill will not be the only places we see an upturn in the market. To me this article was a friendly reminder that the home prices are starting to rebound and the housing market is picking back up.

 Click Here to read the Seattle Times article mentioned above.