Trends in Housing Market, is it Getting Healthier?

Housing Market Trends, Should You Invest Now?

Greater than expected sales of new homes are raising hopes that the housing market is coming back from the historic low levels of sales it had hit earlier this year. Falling prices are creating greater opportunities for home-buyers, bringing sales up by 9.6% in late summer. Better interest rates and a rising sense of faith in the country’s economic health are causing home-buyers to come off the fence and make the major financial commitment to a new home.

Housing Market Trends

Sales rose from an adjusted annual from 395,000 to 433,000. Up 30% from the lowest point in January, numbers are still 70% off of the phenomenal rate of sales just four years ago.

But greater numbers of sales do not mean more money. The average price of homes was down slightly in June from $210,400 to $210,100, but still up from March’s low of $205,100. It’s a delicate balancing act, both in supply and demand. New home-owners are waiting for good interest rates and lower home prices, making the sellers and agents and builders, who are heavily invested upfront, have to wait for their pay-day.

Homeowners are eager to take advance of a federal tax credit that offers 10% of the total home price (up to $8000) for first time home-owners. The sales must be completed by November’s end in order to qualify.

Where Real Estate Crashed Hardest

Hardest-hit by a potential slip in sales are sellers, builders, real estate companies and individual real estate agents. In an effort to see this upward trend continue, builders and real estate agents are urging Congress to extend the credit deadline. They fear that the trend could verge downwards if something isn’t done to stop it. Some builders are already seeing this happen, with their projected build dates not being close enough for a sale by November. If they can’t get the houses up in time for finish, showings, sales and closings by the end of November, the potential buyers won’t qualify for the tax credit. Citing the fragility of the real estate market as a major concern, they say that it’s not the right time to take (the tax credit) away.

Is the Economy Strong Enough to Start Invest Again

In general however, the economy is stronger now, so sales might not fall back to last winter’s lows, say major economists. People are much more optimistic about the economy and their futures. Greater confidence leads to more builds and more jobs in the construction industry, which has been hit hard by the recession. On average, every new home built creates the equivalent of three jobs lasting one year each and generates roughly $90,000 in taxes paid to state and federal agencies.

As of October, housing prices are once again in decline. After a small and short lived bump in July, the housing market has once again taken a downward turn due to fears that the government tax credit will expire. Analysts speculate that unless the tax credit becomes a long term fixture of home buying, the first quarter of 2010 will be rocky.

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