Housing stimulus produces desired result
| April 25, 2010 9:00 PM
The news is out. Housing sales are up across the country. According to the National Association of Realtors, nearly half of recent home sales are due to the tax credit incentives offered to new and even to existing homeowners. The true test of housing recovery then will be after the credits expire this coming Friday, April 30.
Many pundits feel we are emerging from a slow market to a more normal market due to the stimulus effect. Folks wanting to take advantage of the $8,000 for first-time buyers and $6,500 for existing homeowners are buying distressed inventory. As inventory disappears, demand for low priced homes rises. Once these lower priced homes are absorbed many who sold them move up into higher priced homes.
As proof of demand a mid-day search Friday, of the Coeur d'Alene Multiple Listing Service, showed 613 single family home sales are pending currently. This number exceeds the total number of residential sales for the year reported at the end of March. The 573 sales then showed an increase of completed sales 52.4 percent above 2009's first quarter activity.
Nationally, existing home sales rose 6.8 percent to a seasonally adjusted annual rate of 5.35 million units in March from 5.01 million in February, and are 16.1 percent above the 4.61 million-unit level in March 2009. Lawrence Yun, NAR chief economist, said it is encouraging to see a broad home sales recovery in nearly every part of the country, with two important underlying trends. "Sales have been above year-ago levels for nine straight months, and inventory has trended down from year-ago levels for 20 months running," he said. "The home buyer tax credit has been a resounding success as these underlying trends point to a broad stabilization in home prices. This is preserving perhaps $1 trillion in largely middle class housing wealth that may have been wiped out without the housing stimulus measure."
Interest rates remain favorable too, with rates holding at 5.25 percent for the last three weeks. This rate is for a 30-year conventional home loan. As recently as 2007 the same loan rate averaged 6.52 percent. Although up slightly the last couple of months, interest rates remain among the lowest in 30 years.
At a meeting of the Multiple Listing Service last week, Joseph Cool of the U.S. Department of Agriculture was compelled to announce that regardless the rumors, USDA still has money to lend through their direct loan programs. Their most popular, the Rural Development Loan requires zero down payment. Despite reports to the contrary, Cool says funding continues and Congress is poised to act in the event of a shortfall.
So the story remains that prices are good, interest rates are good, the stimulus is helping drive the housing market and home choices are good. We still have plenty of inventory listed in the MLS.
This is the last week we will be able to warn; there is still time to claim a tax credit, but you have to have an offer accepted by Friday and complete the sale in 60 days. Better hurry!
Kim Cooper is the spokesman for the Coeur d'Alene Association of Realtors www.cdarealtors.com. Kim and the association invite your feedback and input for this column. You may contact them by writing to the Coeur d'Alene Association of Realtors, 409 W. Neider, Coeur d'Alene, ID 83815 or by calling (208) 667-0664 with your questions or commentary.