Psychologists will tell you that if someone tells you the same thing long enough, whether factual or not, soon you begin to accept it as truth.  The National Association of Realtors released its second quarter numbers yesterday and to the joy of media outlets everywhere...the news was "Grim"! Housing was down over 25% from 2009, which BTW, was not a great year!  Shout it from the rooftops...the sky is falling...the sky is falling!  Meanwhile, back in the land of "Reality"...interest rates are at record lows, housing inventory is high, mortgage programs and grants are everywhere, and yet we see very little activity. The "Qualified" Buyers want to wait to see what happens to the economy..."Too Risky, haven't you seen the news?". The basic underlying ailments to our economy as it relates to the housing market is unemployment and support of business.  Creating good jobs creates demand for housing.  Demand for housing creates demand for new construction.  Demand for new construction creates good jobs...see a pattern? The experts are still predicting that our sales volume will be higher than in 2009, which means there will be a boomerang effect going into the fourth quarter.  Interest rates are artificially low and will have to go up.  If inventory begins to fall in the fourth quarter and demand goes up...so will interest rates.  If you are looking for a home and it makes great financial sense in this market...ITS BECAUSE IT DOES!!!  Make a decision based on your local market, financial position, and common sense.  Home ownership is a wonderful thing if you are in a position to do afford it and there is no better time than now.  Call one of our professional Realtors today and get started.

The National Association of Realtors announced that the Senate has approved an extension of the closing date to September 30th, 2010 from June 30th, 2010 for those First Time Homebuyers and Step Up Homebuyers who had a valid Offer to Purchase in place prior to April 30th, 2010.  The announcement came very late in the day for many of the lending institutions who pushed hard to close on loans, but will definitely be a relief to many parties still awaiting responses to short sales and other loans that were unable to get closed by the deadline. Interest rates remain under 5% and the market inventory is setting records in many areas.  Call one of our agents today to take advantage of this historic market.

After seeing the effect that the First Time Home Buyer credit had on the real estate market, many real estate firms are coming up with their own versions of a Home Buyer Credit. The reality of the situation is that the First Time  and Step-Up Credit were available to those buyers with binding contracts prior to April 30th, 2010 (Except certain exemptions and military personnel).   Any other offerings as a credit must NOT be confused as a rebate from the Federal Government. One example, is a National Franchise which is offering an "Extended First Time Home Buyer Credit" to those buyers purchasing a home through this company prior to July 31st, 2010.  The confusion to the public is that this credit is NOT a "cash rebate" and is instead a "Seller Credit" which is written into the offer to purchase.  This has become a standard practice over the last few years and can be done through ANY real estate company. Although many underwriters are tightening requirements of the Buyer, they have loosened the restrictions on Seller credits.  This allows a Seller to credit the Buyer money for closing cost and down payment.  In many cases it can be 3-5%.  Using a 5% credit on a home purchase of more than $160,000 would result in the same $8000 credit offered by the government.  In this particular case it comes from the Seller and NOT the US Treasury. Seller credits have become much more the norm in recent years and can be used to facilitate home sales for those with good credit, but limited funds for down payment or closing costs.  It is NOT something exclusive to any one company and can be used as long as the lender guidelines allow it. Missed the deadline for the credit, but still thinking about buying?  Call one of our professional agents today and use this strategy to get the same result!

The question seemed to pop up every day as we neared April 30th, 2010.  What do you think will happen to the real estate market now that the home buyer credits are gone?  The follow up question was...do you think the credits will be extended? The simple answers are...I don't know...and NO!  According to the National Association of Realtors and the US Treasury Department, 63% of qualified first time homebuyers took advantage of the original credit in 2009.  The expanded credit into 2010 was an effort to "continue the momentum".   Given the current condition of the economy, the remaining number of qualified buyers (estimated at less than 17%), and a push to let the housing market correct itself to determine the merit of the credits...it is fair to assume that the "love" in the form of homebuyer tax credits are gone in the near future. As for the future of the housing market...there is some good news.  NAR statistics are showing median home sale prices increasing from the lowest level since 2002.  Interest rates are at historic lows thanks to Federal Backed Securities which pushed interest rates under 5%.  Inventory of homes has hit all time highs due largely to the number of distressed properties which include foreclosure and short sales.  New construction had a substantial increase in housing starts for the first time in 7 quarters and most national Economists interpret these present conditions as being the recovery upswing from the recent recession...good news right??? Now for the bad news...our national unemployment level is double digits and will contribute negatively to the housing market.  First, it will eliminate qualified buyers from the market and second, will undoubtedly bring on inflation which will push interest rates much higher.  The result of this will be less buying power for buyers, higher inventory and less demand which will once again push down prices.  The Federal government got out of the "mortgage buying business" on March 30th, 2010 which did two things.  First, interest rates jumped 1/3 point in one day which lends itself to interest rates climbing steadily over the next few months.  Second, underwriting guidelines tightened up dramatically.  Lenders must now comply with new RESPA laws, achieve a higher accountability standard, and in doing so have made it much harder for buyers to obtain credit. The Midwest has always been a fairly stable market.  We do not have the "peaks and valleys" of a market such as California.  The local market has seen very small depreciation over the last 3 years.  At worst, most sellers have seen the prices stablize with little to no appreciation over that time frame. As for the future of the real estate market...really...its anyones guess.  My personal prediction is the following: 1) The momentum will keep the market on an upward trend into the fourth quarter of 2010. 2) Higher interest rates and inflation will slow the market in 2011. 3) The commercial market will be the next foreclosure victim in the 4th quarter of 2011 into 2012.  Due to tighter lending policies, a huge inventory of vacant commercial space, and a slower economy...banks will be forced to take back numerous commercial properties.  Blighted communities with empty commercial space will have a negative action on the residential market. 4) The election of 2012 will bring about many new "policies" to correct the real estate market.  Look for the government to get its hands dirty once again by backing commercial notes, offering buyer incentives, artificially lowering interest rates, and anything else they can do to win your vote! Given all this information...Buyers (Get into the market while interest rates are low)...Sellers (Get your home on the market before interest rates and inventory gets much higher). Call one of our professional agents today to get more information on market conditions and how we can help you!