Here is an excerpt from my latest newsletter which just went out today. To view it fullscreen with all formatting, graphs and photos click here.
Locally, we began to see improvement in the local real estate market in September 2009. A direct result of the Homebuyer Tax Credit which was initially scheduled to expire at the end of November but has since been extended and expanded.
What was designed to be a stimulus for first time homebuyers now includes homebuyers who have lived in their current home for at least five of the past eight years. First time buyers who place a contract on a home on or before April 30th and close on that home on or before July 1st are eligible for federal tax credits in the amount of $8,000. Move up buyers have the same deadlines but the tax credit amount is $6,500.
Sales during the fourth quarter of 2009 were up 17% in Boulder County compared to 2008. During the entire year sales were down just under 15%.
So far in 2010 the early year activity has been strong. Buyers and sellers, who traditionally wait for spring have been spurred on to a winter start by the tax credit and low interest rates. Showings in our office are up considerably and contracts on homes have picked up dramatically in February.
We all know that interest rates are a very important piece of the home buying process. A one percent rise in interest rates can make a huge difference in the affordability of a house. During this difficult economic crisis we have been lucky to have had interest rates in the 5% range. This will not last forever. In fact, the Federal Government has kept down interest rates by buying mortgage backed securities. The money for this program is nearly out. By the end of March, many experts expect rates to begin to rise. If you have been considering a purchase or a refinance, now is the time! The attached chart shows mortgage interest rates since 1972. Right now is the bottom.
While our market has not been stellar over the past few years, it is good to keep the relative strength in our market in perspective. The national media focus have been on the markets that have been the hardest hit. Our local market has been much more stable. It would be a much different scenario locally if home values would have dropped significantly. As it stands, we are down just a few percentage points over the past few years and relatively few homeowners who put down a 10-20% down payment are “upside down” in their mortgage. See the chart below to see the strength in our local market over the past three years. Boulder County continues to be a good place to invest and own real estate.