I received a wonderful email message today from the President of the Portland Home Builder’s Association. The real estate market is looking up this Spring. Consider the following message and statistics:
As we enter the ever-important spring home buying season, there are a several exciting indications that the market may be coming back to life:
- In February, new-home sales rose for the first time in seven months, and existing home sales rose 5.1 percent, which marks the largest increase in nearly six years.
- Also in February, pending sales for previously occupied homes, which act as a barometer for future home sales, rose by 2.1 percent
- According to the National Association of Realtors, homeownership is now more affordable than it’s been since 1970 due to falling mortgage rates and less expensive home prices, which should spur on sales.
- Home sales are expected to gain momentum by the second half of the year as more and more first-time buyers take advantage of the new $8,000 tax credit, thus absorbing a great deal of the current excess inventory. The National Association of Home Builders predicts that the credit should spur on about 160,000 additional home sales between now and Dec. 1. Consequently, NAR economists predict that most markets will achieve price stabilization by the end of 2009.
- In a survey recently conducted by Century 21 Real Estate among prospective first-time home buyers, 78 percent indicated that now is a good time to buy a home. Adding to this, Move, Inc. found that nearly 20 percent of home buyers plan to purchase a home this year to take advantage of the tax credit.
- Inventory is being whittled away as mortgage rates continue to fall. The average 30-year home loan rate fell to a record 4.78 percent this week, which is the lowest rate Freddie Mac’s seen since it started tracking weekly changes in 1971.
- Freddie Mac also said the average interest rate on a 15-year loan dropped to 4.52 percent, down from 5.42 percent a year ago. This rate is the lowest Freddie Mac’s had since it started tracking the 15-year loan in 1991.
- The new tax credits for energy-efficient homes are expected to generate $6 billion in the remodeling arena by 2010.
What does this all mean to you? People are buying houses again. Inventory is moving. Consumer confidence is returning. Remodeling is more attractive than ever. The light at the end of this seemingly never-ending tunnel is finally in sight. So don’t give up hope. Our industry is resilient and will make it through these trying times. Remember, what doesn’t kill you makes you stronger.
Tom Skaar (2009 HBA President)