No tax credit? No problem! - Columbus Board of Realtors

married, they were still having kids. Life was going on and,
due to the fact that the unemployment rate has pretty well
stabilized, that gives a little bit more consumer confidence.”
Gretchen McKay, CBR CORPAC Co-Chair, agreed. “Most
home buyers I meet are of the mindset that they were not
going to let the looming tax credit expiration pressure them.
While the credits pushed some buyers off the fence, others
will take their time and take advantage of the great deals
out there. The spring and summer home buying season is
going to be just fine.”
Kathy Shiflet, CBR Board of Directors member, echoed
Gretchen’s statement, adding, “I’ve been polling buyers in
my open houses and about 70 percent don’t care about the
tax credits. They don’t want to be rushed. They’re still going
to buy a home but they’re doing it on their own timeline.”
Unemployment is easing
While many buyers may be willing, their fiscal situation
is key. Sustained job gains are vital to encouraging more
people to buy home.
For most of 2010, the unemployment rate has remained steady
at 9.7 percent after peaking at 10.1 percent in October.
The Labor Department reported that March saw initial claims
for unemployment benefits fall by 24,000 to a seasonally
adjusted 456,000. Applications for jobless benefits reached
a high point in March 2009 and since then, have slowly
trended down over the past year.
At the same time, NAR reported that March saw national
home purchases jump 6.8 percent to a seasonally adjusted
annual rate of 5.35 million. This led Stuart Hoffman, chief
economist at PNC Financial Services Group, to predict that
“the spring selling season will be a success and probably
the most active we’ve seen in years.”
Households unfazed by
expiring tax credits
The expiration of the home buyer tax credits won’t deter optimistic
households who believe the market is improving, according
to a recent survey by Prudential Real Estate and Relocation
Services. More than 90 percent of those surveyed believe the
home buyer tax credits have helped both first-time buyers and
the overall housing market but 65 percent say that the end
of tax credits won’t reduce their personal interest in buying a
home. Over the next five years, 79 percent expect real estate
prices to increase and 20% expect prices to rise substantially.
Only 12% believe prices will decrease. Among renters, 75
percent believe owning a home is a better long-term choice for
them than renting. The majority of consumers also believe that
homeownership is a good investment, with 75% saying it is better
than stocks or bonds, 72% preferring it to mutual funds and
74% saying it surpasses savings accounts. (Source: Prudential
Real Estate and Relocation Services, Inc.)
Brian Bethune, chief U.S. financial economist at HIS Global
Insight said that the economy is experiencing solid growth but,
“will still have to expand at a decent rate for several more
quarters before we get decent job growth.”
Interest rates remain at historic lows
As inflation declines and economic indicators improve, the
Federal Reserve will look for a falling unemployment rate in
coming months. The Fed has noted that low interest rates are
likely to remain for an extended period and Freddie Mac
reports that they continue to hover around five percent.
“The reasons people buy and
sell homes don’t change so we’re
not worried at all. There are
still great houses on the market.
Now is still a great time to buy
a home.” – Sue Parrish, Keller
Williams Classic Properties
Foreclosures still have impact
However, foreclosures continue to trouble the market. Realty-
Trac Inc. reported that nationwide, filings rose 16 percent in
the first quarter from a year earlier and the number of bank
seizures was at a record high. A glut of foreclosures depresses
home prices and adds to inventory.
But in central Ohio, the average home sale price has actually
risen 5.9 percent in the past year to $151,719. “Home
prices have shown steady increases for the last few months,”
said Lusk-Gleich, “Another key factor in any market recovery.”
While hurting some home owners by driving down property
values, foreclosures also make the market affordable to more
buyers. The average home sale price in Columbus is nearly
$20,000 lower than the national median, making central
Ohio an incredibly affordable place to buy a home.
Overall, central Ohio is optimistic
“The reasons people buy and sell homes don’t change,” said
Sue Parrish of Keller Williams Classic Properties, “so we’re
not worried at all. There are still great houses on the market.
Now is still a great time to buy a home. I’ve survived three
downturns in the market and it always bounces back.”
Added CBR Director Chip Parrish, “We owe it to our clients to show
them that now is a still a great time to buy, tax credits or not.”
Sources: WCPN, “Ohio Housing Sales Rebounding,” Rick
Jackson, April 22, 2010; Bloomberg BusinessWeek, “Sales of
New Homes in U.S. Climb by Most Since 1963,” Courtney
Schlisserman, April 23, 2010; The Associated Press, “Home
sales rise as unemployment claims fall,” Christopher S. Rugaber,
April 22, 2010; MarketWatch, “Fed remains cautious despite
good economic news,” Greg Robb, April 28, 2010.
www.ColumbusRealtors.com • In Contract Magazine • May/June 2010 •