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

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No tax credit? No problem! Central Ohio’s market remains strong even as home buyer tax credits expire The home buyer tax credits are no longer with us. To take advantage of the $6,500 to $8,000 credits, home buyers must have been in contract by April 30. That is leading many to wonder what May 1 – not to mention the rest of 2010 – will look like. Did the tax credit create an ‘early spring’? March home sales surged 27 percent across the nation, the U.S. Commerce Department reported, pointing out that that was the largest monthly gain since April 1963. In central Ohio, home sales were 54.1 percent higher than the previous month and 25.3 percent higher than March of 2009. “The appreciating home sales reflected in March’s numbers will counterbalance the loss of the tax credit. I’m hopeful for a good summer.” – CBR Director Ben Calhoon, Prudential Calhoon Company While great news, this rush of buyers led to speculation that a surge in home buying was fueled by the impending tax credit expiration, implying that sales will atrophy once the credits had gone. “There’s no question the home buyer tax credits have a lot to do with our market activity,” said Sue Lusk-Gleich, CBR President. “But the significant increase in listings as well as rising sale prices are clear evidence that our local market is regaining its strength.” “The appreciating home sales reflected in March’s numbers will counterbalance the loss of the tax credit,” confirmed CBR Director Ben Calhoon. “I’m hopeful for a good summer.” Ohio Association of REALTORS® president Doug McCloud offered a regional perspective. He explained that the tax savings is only one of a long list of reasons people chose to buy a home. Mortgage interest rates are at a historic low and pent-up demand is high. “Over the last couple of years, people weren’t getting into the market, they weren’t buying, but they were still getting • May/June 2010 • In Contract Magazine • www.ColumbusRealtors.com
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 •
Page 1 and 2: IN may/june 2010 • volume 37 •
Page 3 and 4: Features 6 No tax credit? No proble
Page 5: www.ColumbusRealtors.com • In Con
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Page 11 and 12: CCIIR - Outside clean up at the Hei
Page 13 and 14: tance. That said, my greatest joy w
Page 17 and 18: Committee Report Are you aware of w
Page 21 and 22: Committee Report ALL HANDS ON DECK!
Page 23 and 24: What is NAR’s RPR (REALTORS® Pro
Page 25 and 26: can reach her toll free at (877) 62
Page 27 and 28: MEMBER Discounts / Services 1-800-G
Page 29 and 30: May-June 2010 Classes at at a a gla
Page 31 and 32: Education Classes Education Classes
Page 33 and 34: Events May 10-15, 2010 NAR MidYear
Page 35 and 36: June 27, 2010 Super Sunday Affordab
Page 37 and 38: Area Association Golf Outings Thurs
Page 39 and 40: RS Broker Members Matthew D. Cochre
Page 41 and 42: Survey: How do you feel about the e
Page 49 and 50: Recipients of the NAR REALTOR® Eme
Page 51 and 52: 2010 REALTOR® Salesperson of the Y

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