Pending home salesPending Home Sales See Sharp Decline
Pending home sales in Tallahassee look to be racing downwards and might create a new market bottom in the coming weeks. With the anniversary of the Homebuyer Tax Credit just 10 days away, I would say the odds are pretty good that we will see this happen.
One year ago, first time homebuyers were drawn into the market to take advantage of up to $8,000 of federal tax savings if they purchased a home (as were other homebuyers). Many of us in the real estate industry felt that the tax stimulus was not a good idea, as it did nothing but "steal" future homebuyers and bring them into the present real estate market. Well, that present market is now past, and our current market must exist on fewer buyers. The net effect on the market was minimal, and now there are fewer tax dollars at the federal level.
Just how far it will go down is anybody's guess, but I think the level of pending home sales (homes under contract and awaiting closing) will rebound rapidly after the end of April. Low home prices are pulling buyers into the market, but it will take some time to overcome the depleted first time homebuyer segment.
Closed Home Sales To Follow Suit
As we see our pending home sales decline, it is only natural to assume that we will see a similar effect on the closed home sales in Tallahassee. The following real estate graph shows that closed homes sales are still above the housing market bottom established in August 2009, but we have three more months before the anniversary of the end of the Homebuyer Tax Credit home closings.
Again, time will tell how this all plays out. I recommend that you keep your eye on two key factors: Local news on employment and national news on interest rates. As we all know, mortgage interest rates are near an all-time low, which is doing nothing to stimulate the real estate market. But if we see rates rise, there will certainly be a significant and immediate effect realized in home sales.