Real Estate: “Are We There Yet?”
How Far Away from the Recovery Are We
By Hicks Malonson
If you have children and you took a trip this summer then you probably heard the question “are we there yet?” on a regular basis on your drive. We hear these words in real estate quite often these days as well. “There” in real estate refers to a recovery in the market, and like on the family trip the best answer is simply “not yet”.
If we want to define recovery as a return to the sales numbers and prices of the middle of the decade then we are likely a long way off. However if we want to use significant improvement in sales numbers as an indicator of progress, then we are certainly on an encouraging trend.
Existing home sales measured nationally rose 7.2% to a seasonally adjusted annual rate of 5.24 million units in July. This compares to a rate of 4.89 million units in June and is the fourth consecutive month of rising sales. We have to look back to June of 2004 to find another time when sales increased four consecutive months. Comparing sales from July 2008 to this year we were 5.0% ahead of the 2008 pace. The last time we had a year to year increase like this was November 2005.
Home price to income ratios have fallen in the majority of the country and this has increased the number of cash sales. It is remarkable to see an actual shortage of inventory in some recovering markets such as San Diego, Las Vegas, Phoenix and Orlando where the demand for foreclosed and bargain priced property has outpaced supply.
OK, these are national sales figures, what does this mean to us where we live? Well, we will benefit from the national trends when a seller in Milwaukee (or pick you city) can sell their home to make the move to west Cobb. The number of people having to wait to sell will decrease as sales improve and this will free them up to buy a home where they are moving. Remember why you chose to live where you do? These same reasons will attract new people to our area.
What has caused things to improve recently? One factor is the $8000 federal tax credit for “first time home-buyers.” This credit is available to anyone who has not had an ownership interest in a primary residence in the three years prior to closing. A survey of Realtors® nationwide shows that 30 percent of the homes purchased in July were bought by people who qualify for this tax credit. My personal business also reflects this trend and many other Realtors® have told me about working with more first time buyers. The catch to this tax credit is that it is scheduled to expire at the end of November. If anyone in D.C. has been paying attention to the improvement in the market then I would expect an extension of this program. We also have a tax credit for home-buyers in the State of Georgia. It seems that fewer people know about this credit that can total $1,800 spread over three years. There are detailed restrictions that you should discuss with a tax professional, but the basics of the credit allow you to apply on the purchase of just about any single family residence that was listed for sale prior to May 11, 2009. Both of these tax credits are refundable, meaning that you can receive a check for any amount that exceeds your income tax liability. Contact a professional Realtor® or tax expert for details.
West Cobb market activity has really mirrored the overall Cobb County trend. At the end of July Cobb offered a 9.6 month supply of detached homes county wide while west Cobb was only slightly better at 9.5. The trend in sales since February of this year has been steeply positive with a 69.2% increase in sales County wide and a 78.6% improvement in West Cobb. Prices County wide have improved on average from $215,000 in February to $250,000 and from $236,000 to $290,000 in West Cobb. One important thing to remember is that season makes a difference in sales in any market and spring to July sales always exceed February figures in quantity and price—but this is an encouraging trend in any case.
So, “are we there yet?” Depending on where “there” is, we are certainly getting closer. As demand increases and supply decreases the economic basics take over and prices stabilize. We are seeing some of this occur and it is reflected in the number of sales. If you know someone looking to buy their first home, now is a great time to make that move. Contact a professional Realtor® and get going today!!!!!
*Statistics referenced above are provided by the National Association of Realtors® and Trendgraphix© with data from FMLS®.
About the Author: Hicks Malonson is an Associate Broker with Harry Norman, Realtors® in Marietta. A Marietta native, Hicks is completing his eleventh year in real estate and he has developed an extensive knowledge of Cobb County properties. You can learn more at www.hicks.malonson.harrynorman.com or by calling 770-315-9440.