Phew! After four years of declining home sales, the numbers appear to be finally stabilizing, with closed sales and pending contracts at above-normal numbers. In particular, first-time buyers are helping buy the market by taking advantage of low prices and interest rates, as well as the $8,000 tax credit offered by the federal government.
At least for now, home prices remain attractively low, and mortgage payments as they relate to income are very comfortable. All the information seems to point to the fact that home prices have actually overcorrected downward. What does that mean? It indicates that many markets may experience a price "snap back," with values increasing a lot more than the historical average of 3% appreciation per year.
Some factors may continue to make buyers cautious, mostly declines in retirement savings and a lukewarm economic recovery with unemployment hovering around 9% to 10% nationally. Now is not the time to hesitate, however, as mortgage interest rates are expected to rise in 2010.
We can expect the momentum of home sales to continue, especially with the extension of the tax credit through April and the fact that qualification is no longer limited to just first-time buyers. Prices and interest rates will rise this year, so buyer confidence should be at an all-time high. The pressure cooker of pent-up demand is about to blow its top! Make sure you're in a position to take advantage of this incredible opportunity as a buyer or a seller!
