Lennox's Real Estate Blog

sharing my passion for real estate

My 2009 Wrap Up

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Letters from Lennox, Dec. 2009

As we bid farewell to 2009, I thought this might be a good time to reflect on the factors and events that impacted the real estate market during the past year.

Housing Stimulus:

On February 17, President Obama signed into law the American Recovery and Reinvestment Act that included an $8,000, non-repayable tax credit. We immediately saw an uptick in home sales in the more affordable markets throughout the nation. It also helped bring down inventory levels in the more affordable price ranges to pre-October 2008 levels and started stabilizing home values. High cost markets, such as Seattle, benefitted from FHA loan limit optimization, which increased loan limits and opened up more affordable down payment options to the mid to upper price ranges. In the weeks following the passage of the tax credit, interest rates fell below 5% and refinancing applications nearly doubled. All of these events marked the end of real estate’s five months of pain that started when consumer confidence dropped substantially in September 2008.

Increased Affordability:

As the year went on, interest rates stayed low, prices began stabilizing, and sales continued to rise. One of the biggest perks ended up being affordability levels that we haven’t seen in decades. In some markets, we saw up to 25% more purchasing power thanks in part to historically low interest rates that were the result of the Treasury buying mortgage-back securities. Also helping affordability were adjusted lower home prices, the tax credit, and higher FHA loan limits. Each of these items led to increased affordability, and as a result, home sales continued to steadily improve.  

Tax Credit Extension:

As we transitioned into fall, the expiration of the tax credit was on everyone’s minds. Real estate professionals everywhere reported a frenzy of first-time buyers trying to close on homes before the tax credit ended. As a result, most markets experienced a large surge of sales in September/October. Meanwhile, the US Government recognized that extending the tax credit was critical to continued economic recovery. On November 6, President Obama signed into law the updated Federal Tax Credit, which not only saw the extension of the existing $8,000 tax credit for first-time buyers, but also a new $6,500 tax credit for eligible repeat buyers through April 30, 2010.

Running Start Into 2010:

As many of you are already experiencing, winter will not be “business as usual” for the housing market. Thanks to historically low interest rates (below 5%!), adjusted home prices, and the passage of the extended/expanded tax credit, we are getting a running start on the New Year. The more affordably priced markets experienced recovery in 2009, which kick started the chain reaction of sales into the mid price points. As I reflect on the past year, it’s clear that 2009 served as a metaphoric bridge; helping move us through the economic downfalls of 2007/2008 and leading us into a more balanced, stable 2010.

Written by Lennox

December 10, 2009 at 9:12 pm

One Response

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  1. Lennox: It’s great to see you blogging! I’ll give you a shout out on our TeamBuilder twitter and Facebook pages! (Great picture by the way-love the blues brother sunglasses)

    Vija Williams

    February 11, 2010 at 2:03 pm

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