I have some good news to share with you. The U.S. House of Representatives voted by an overwhelming 403-12 margin to approve the Unemployment Compensation Extension Act (H.R. 3548) that included, as an amendment, the extension and expansion of the Homebuyer Tax Credit. The bill already passed in the U.S. Senate yesterday by a vote of 98-0, so now it will advance from Congress to the White House for President Obama’s signature. It is one step away from being signed into law, and the Administration already has signaled its support of the Homebuyer Tax Credit amendment as well as the President’s intention to sign the bill.
This is an historic moment for our industry as well as the culmination of more than a year’s worth of hard work and meetings with elected officials and policy makers on the part of Realogy management. I am both proud and appreciative of how so many of our employees, franchisees and sales associates participated in various grass roots outreach efforts with Congress. Our Company’s efforts on Capitol Hill truly helped make a difference on this issue.
Again, this bill is now one step away from becoming law. Our voices were heard in Washington, D.C., and we should be proud that our government is taking strong action to help our industry and the economy. Having an extended and expanded Homebuyer Tax Credit available to qualified homebuyers through the first half of 2010 undoubtedly will benefit our business and the U.S. economy.
The new bill calls for an incentive for buyers who have owned their current homes at least five years, making them eligible for tax credits of up to $6,500. First time homebuyers – or anyone who hasn’t owned a home in the last three years – would still get up to $8,000. To qualify, buyers in both groups have to sign a purchase agreement by April 30, 2010 and close by June 30.
The credit is available for the purchase of principal homes costing $800,000 or less, meaning vacation homes are ineligible. The credit would be phased out for individuals with annual incomes above $125,000 and for joint filers with incomes above $225,000.
The credit would be extended an additional year, until June 30, 2011, for members of the military serving outside the United States for at least 90 days.
As an industry, we are certainly pleased that the tax credit may be extended and expanded. The key to returning stability to the economy lies within the housing market, and we have crafted a meaningful credit that will create a strong foundation for future growth and make a measurable difference over the next seven months in our economy.
Furthermore, tax credits like this only work by creating the sense of urgency to take advantage of them. This is said to be the last extension of the home buyer tax credit and I urge people – whether they’re first time home buyers who’ve always dreamed of having a home of their own or someone who has been gridlocked in the challenges of our move-up market to take advantage of this opportunity.
In other real estate news, NAR released its pending home sales report this week which showed that pending home sales rose again, making eight consecutive monthly gains—the longest streak since measurement began in 2001.
The report showed pending home sales rose 6.1 percent to 110.1 from a reading of 103.8 in August and is 21.2 percent higher than September 2008 when it stood at 90.9. The gain from a year ago is the largest annual increase on record, and the index is at the highest level since December 2006 when it was 112.8.
I agree with NAR’s assessment that the momentum is based on a rush of first-time home buyers trying to beat the expiration of the tax credit at the end of November. We’re feeling that rush in many of our offices.
As to keep things in perspective I would like to point out NAR’s Chief Economist Lawrence Yun’s comments that “We’re clearly not out of the woods because an excess of homes remain on the market despite recent improvements,” he said. “Although current inventory is getting closer to price equilibrium, foreclosures will continue to enter the pipeline. An extended and expanded tax credit would help absorb this income inventory.” That truly is why we are so pleased with the potential of the bill’s passing.
Now, let’s take a look at this week in real estate:
- El Dorado Hills— Inventory is still low and short sales are rising. We have very few REOs but don’t expect to see a flood of activity in that market anytime soon. Buyers are still looking for great deals.
- Elk Grove—We are seeing more and more regular sellers. Agents are feeling hopeful that this is a sign of some normalization. Time will tell. Agents that are knocking doors, calling database…good sound fundamental activities are working….
- Placerville— October was busy and buyers are out looking for well priced properties. The high end is still slow with a lot of competition from buyers. Inventory is still low with very few REOs which helps our market prices stabilize.
- Roseville/Granite Bay— Need fresh inventory. Many short sale offers out!
- Sacramento Fair Oaks— The overall market is stabilizing in prices because of the low numbers in our inventory. The real sellers are getting more involved in our market conditions. They are actually getting off the fence and are making decisions on selling and or buying.
- Tahoe/Truckee—Active Inventory Summary: Active Listings: The listing inventory for the Tahoe-Truckee market continues to go down as homes sell and homeowners take their homes off the market for winter. Currently there are 1,915 active listings - 1,303 residential properties and 612 lots and land listed for sale. Active Listings - REO’s and Short Sales: Of the active listings, there are 169 properties listed as short sales, (8.8%) and 70 properties listed as REO sales, (3.7%). While less than 13% of the active listings are short sales and REOs, roughly 23% of the properties selling are short sales and REOs. Sales Summary: Last Week’s Sales: For the week of October 26th to November 1st it was the third best sales week of the year with 36 properties sold. Of the properties sold last week, six (6) of those sold at a price above $750,000. Coldwell Banker was involved in 11 of the properties sold. Pending Sales: Pending sales decreased once again to 162 properties from the previous week. Market Activity Summary: With the three strongest consecutive sales weeks of the year it is clearly an indication of buyer’s continued interest in well priced properties and the tremendous values which exist in the market. While visitor activity has fallen off with the fall season, buyers who have been watching the market are seizing this unique time to buy Tahoe-Truckee real estate in a down market. Coldwell Banker currently has over 45 homes in escrow scheduled to close in the next 30-60 days.
I wanted to let you know that we are officially making Weekly Market Watch a once every other week publication. With the market changing very little from week to week we just felt it was an obvious choice. If news or the market warrants, we will return to once per week or we will simply provide you with special editions.
We will return with our next edition of Weekly Market Watch on November 19.
Until then,
Make it a great November,
Bob Bronswick
Coldwell Banker Residential Brokerage Sacramento/Tahoe
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