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There are plenty of signs that the housing market can sustain a short-term recovery, even though the sector has lost some of its momentum and will continue to feel the effects of the weak labor market.
First, the government’s incentives to attract first-time homebuyers has been a success.
Second, the inventory of new homes is starting to diminish.
Third, there seems to be a healthy correction in the inventory of existing homes.
Lastly, mortgage rates are becoming very attractive.
Source: http://www.nuwireinvestor.com/articles/shrinking-housing-inventory-favors-short-term-recovery-53820.aspx The short-term recovery looks favorable, though the US is not out of the woods yet so to speak. Other trends such as the rate of unemployment, number of foreclosures, will affect the real estate recovery and the rate of that recovery.
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With the fate of the stimulus bill in the hands of Congress, a vast majority of people in the real estate industry are touting the benefits of the first-time homebuyer program, and even urging its extension to current homeowners. Yet a Zillow poll disputes the extent of the credit’s impact, indicating that for a significant number of buyers continuation of the incentive would not be a factor in their purchasing decision. Many experts have said that the $8,000 first time buyer tax credit, which is due to finish at the end of November, has had a major impact on the property market.
A bill to extend the programme is currently before the US Senate.
Realtors are backing an extension. In a poll by real estate company Weichert 71% said that the homebuyer tax credit was the single largest factor motivating buyers in 2009
If the credit were extended, Zillow predicts that 1.86 million homebuyers would take advantage of the program and that would cost around $14.86 billion.
The only way we can assure that the progress we’ve made can continue is to extend the credit and to do that now,’ said NAR president Charles McMillan. source: http://www.nuwireinvestor.com/articles/survey-undermines-importance-of-first-time-homebuyers-credit-53802.aspx
Consumer confidence is at a low point for most of the population in the US. Purchase of a home is a huge decision as well as financial commitment. The tax credit has a positive effect on buyer confidence in today’s market.
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