This is an update of an earlier post.

 

Earlier post:

 

Well, the tax credit has ended.  There are basically two schools of thought on this:

 

A) The tax credit got "buyers off the fence" and began to gobble up inventory, setting the stage for, or inducing, price appreciation in many markets which will both "heal" those markets, improving psychology and the finances of the banks who are underwriting loans in those areas.

 

B) It will delay a "true bottom" where home sales and values go far beyond their intrinsic levels, which in turn sparks a "true recovery".  At the end of the day, it will help the market little, or not at all, and we will all have this enormous tax burden to pay off, with little return to show for it.

 

Most of the brokers I talk to are at least a little concerned that the May and June markets (typically our best!) will fall flat.  Some are Very Concerned, but I'm comfortable putting them in a small minority.  Myself, I do expect a lull, but with prices rising in my area for a year - and inventories far too low for most buyers, I think a small, but important price advance will probably continue.  I think that with most home sellers since 2003 under water from their purchase price (yes, seven years of sales, and those in 2003 are at break even), many sellers will stay put - keeping inventories tight, and putting pressure on prices.  Further, an improving job market, loosening credit, and healthier bank balance sheets all point to a better situation for buyers than we had the last 12 months.  We'll see, but I'm optimistic that their will only be a little lull.  I certainly hope it wasn't all tax money down the drain for nothing.

 

 

UPDATE

March--2011 Update:  Well, the May and June markets of 2010 were good in Metrowest. Even July had solid activity, but it really wound down after that, with October, November and December really not that exciting. That was surprising,  as rates wound down in the fall, touching some really good levels for buyers, but the buyers remained patient.  I think there's lots of evidence that lack of quality housing is holding things up - there's simply very little appetite for risk out there (but it has been getting better in 2011), but overall, we need more push from the buyers to have all the homeowners out there see some equity gains.  As far as prices, they were up last spring, for sure, but fell back down in the fall, perhaps to new lows, but certainly killing any gain on an annual basis.

 

 

Thoughts?

 

Matt

 

 

 

*All information is posted in good faith and is assumed to be reliable, but may rely on third party information sources.