Spring is a favorite time of year, especially for people selling homes. Though things will be different this spring as the housing market weans itself from several life support systems, many are hopeful.
The already once-extended homebuyer credit is set to expire at the end of April and the impending deadline has propelled many homebuyers into action. There's also been a slight uptick in U.S. job creation which has helped first time home buyers feel more confident taking the leap to homeownership. But the dual problems of record unemployment and home foreclosures still hover; problems that continue to hamper recovery efforts. That is why some industry experts predict a housing market nosedive as government-assisted programs designed to help the market through its toughest time since the Depression come to an end.
The housing market crash contributed to the current recession and still trails the rebound begun in the latter part of 2009. Job growth and a recovery in the housing market are desperately needed to keep the economy on its current expansion path. Record low home prices fueled by the Federal Reserve's $1.4 trillion purchase of mortgage-backed debt and the promise of an $ 8000 federal tax credit lured many buyers back into the market. But Federal buying ended in March, the tax credit ends on April 30th and interest rates are creeping upwards. So no one really knows what'll happen next.
Historically low mortgage rates and home prices that are still 30% less than they were when the market peaked in 2006 - along with seasonably warmer weather - should all help continue the recent uptick in homebuyer traffic.
The National Association of Realtors (NAR) was surprised by February's numbers. Signed contracts for home purchases were up 8.2%, likely fueled by the rush to take advantage of the impending homebuyer tax credit deadline (which likely won't be extended again). To qualify, contracts to purchase property must be signed by April 30th, and all loans must close on or before June 30th. NAR estimates that by the time it expires, one-and-a-half million repeat home buyers and nearly 3 million first-time homebuyers will have benefitted from the federal homebuyer tax credit program.
The numbers are encouraging, especially since spring home sales are usually a good indication of what happens during the rest of the year. And after months of declines in new and existing home sales, we could all use some encouraging news from the housing market!
