Real Estate Roundup with Sharon Alva: The ups and downs of the housing market
Timing is always an issue in real estate, but right now the clock is really ticking on first-time buyers. Contracts entered into by April 30 (just seven days away) and closed by June 30 can enjoy both the federal tax credit of up to $8,000 and the state’s tax credit of up to $10,000. The California Association of Realtors has warned that with the volume of sales growing and buyers rushing to use these tax credits, the state’s $100 million may run out within three weeks. But for those who register and collect the tax credit, the $18,000 will ease the blow of being a first-time buyer.
The California home buyer credit offers qualified buyers who make a purchase between May 2010 and August 2011 a credit for 5 percent of the home’s purchase price up to $10,000 over three years. California expects this to be a boost to the state’s general fund.
National Association of Realtors Chief Economist Lawrence Yun thinks with the recent Pending Home Sales Index surging 8.2 percent over January and 17.2 percent year-over-year in February, enough inventory could be absorbed to further stabilize the housing market.
“The rise in buyer contract activity may signal the early stages of a second surge of home sales this spring. The healthy gain hints home prices are continuing to flatten,” Yun said. “We need a second surge to meaningfully draw down inventory and definitively stabilize home values.”
We will be feeling the effects of the tax credits into June as contracts close and the inventory is depleted by the rush of buyers. In fact in Alameda, we continue to have a dearth of properties to show. I recently had to create a broker’s market analysis for a property and could only find two competing properties. There was nothing relevant to compare the property to within a 12-month period.
The housing market does seem to have a new spring in its step so many organizations, including National Association of Realtors and National Association of Home Builders are no longer pushing for an extension of the federal tax credit.
Despite the good housing news, we need to acknowledge that many are still looking at short sales and foreclosure. The first quarter of 2010 saw a 7 percent rise in foreclosures over the previous quarter. California and Florida account for nearly 40 percent of the nation’s foreclosures. The fact that California is offering an additional credit could be a blessing.
Consumers are naturally inclined to want to see the tax credit extended, but for many the decision to buy or not is more dependent on the job market than the housing market. Without a sense of security in the longevity of their jobs, buyers are unlikely to commit to high mortgage payments.
Here’s a little piece of non-real estate news: Nea Community Learning Center is having its first-ever rummage sale from 9 a.m. to 2 p.m. this Saturday, April 24 on their campus, which is at 500 Pacific Avenue. In addition to the sale, a silent auction for four-foot-by-four-foot murals created by Nea learners will be held to support the school’s art program. They’ll have baked goods too. Parking is available in the lot on the school’s Lincoln side.
Sharon Alva is a real estate agent with Alain Pinel, living in Alameda. You can reach her at firstname.lastname@example.org.