It Passed! Now What?

A compromise on the Economic Stimulus Package has been reached. The new price tag: $787 billion. That’s below both the $820 billion House-passed version and the $838 billion Senate-passed version.

Just like with anything in life, the final package is all about compromise. Real estate advocates from NAR and Realogy President Richard Smith lobbied well on our behalf but in the end only a portion of the requests we had of lawmakers were made part of the final Economic Stimulus Package.

I am encouraged that lawmakers have now reached an agreement and we can finally move forward with some direct action.

The goal of the highly controversial Economic Stimulus Package is to create or save some 3.5 million jobs while helping to rebuild our nation’s economy which has been in a recession since December 2007. Although, at writing of this piece, the details of the legislation had not been finalized we do anticipate a number of important housing provisions, including (as reported by NAR):

• “Homebuyer Tax Credit – a $8000 tax credit that will be available for qualified purchase of a principal residence by a first time homebuyer between January 1, 2009 and December 1, 2009. The credit does not require repayment. Individuals who purchase in 2009 using financing assistance from state and local mortgage bonds will be permitted to use the credit, as well. Click here for a chart with details on the first-time home buyer tax credit: http://www.realtor.org/wps/wcm/connect/b32db1004d05f6338052c5fd73e5610f/government_affairs_tax_credit_chart_021308.pdf?MOD=AJPERES&CACHEID=b32db1004d05f6338052c5fd73e5610f
• FHA, Fannie and Freddie Loan Limits – Revised loan limits for FHA, Freddie Mac, and Fannie Mae. Specifics have not been released but reports indicate that the 2008 limits have been reinstated for 2009 except in those communities where the 2009 limits are higher. Additional increases in individual communities may also be available at the discretion of the HUD Secretary.
• Foreclosure Mitigation & Neighborhood Stabilization – Funding for states and local communities to be used for neighborhood stabilization activities for the redevelopment of abandoned and foreclosed homes are authorized.

In addition to these new elements, NAR continues to work with the Department of Treasury to implement a mortgage buy-down program. The details on that will surface over the next several weeks.

To view all of the housing provisions, click here: http://www.realtor.org/government_affairs/gapublic/uae_hr1_additional_provisions

So what’s next? President Obama is pushing to get quick approval of the emergency package so he can sign it into law before the end of this three-day holiday weekend.

Once it is signed into action, Washington is eager to get the funds into the local state governments and ultimately the local economies so they begin to directly affect Main Street. Consider reading this article from CNN with more details on the package itself: http://money.cnn.com/2009/02/13/news/economy/stimulus_individuals/index.htm?postversion=2009021308

There’s no question, it will take several weeks—if not months—before we begin to see some patterns or trends and for this package to have a full impact on our economy. But I am gratified that the government recognized the importance of passing the Economic Stimulus Package. The health of the nation’s housing market is critical to the financial well being of every household in the country and that, of course, is front and center right here at home. I believe the legislation will help to stabilize the housing market, at a time when our country needs it most.

With this news in tow, let’s take a look at this week in real estate:

• Boulder County—New listings in the Boulder market are up 25% week over week, with sales up slightly. The best news is that showings are up sharply, with nearly twice as many showings in December. The higher rate of showings is holding steady for the first week of February. Several Agents who have had listings languishing for several months report that they are now going under contract. Most of this activity is in the lower 1/3 of our price range.
• Colorado Springs—The high-end market is slow due to jumbo loan requirements—though now that the Economic Stimulus Package has passed that may change. Sales of properties under $150,000 are up compared to a year ago. Foreclosures among military is a real concern as 1/3 of returning military are home owners. Vacancy on rentals is now at 10%. Listings are down about 9% over last year.
• Conifer—We had four new listings during the week, while our sales activity was on the decline. We had no new contracts this past week. We’re still awaiting short sale approval on one contract. Showing activity continues strong with 37 showings during the week. The buyers are out there. They are just sitting and waiting.
• Denver Central—We are following much of the same trend—great activity in showings and listings. We feel confident that contracts will follow. We are seeing increase movement in higher-end homes and buyers showing us that consumer confidence is growing.
  Devonshire—This has been an interesting week for Devonshire as the number of new listings is down and showing activity is up. With this scenario we should see prices holding steady. As more of our current inventory is sold, our market will begin the upsurge that we are all looking forward to. The spring season should bring good buyer activity and sellers that have been in the wings putting their homes on the market.
• Evergreen—Our Evergreen office reports a total of eight new listings for the week while three of our listings went under contract and three buyers went into contract. We had 50 showings for the week. A new listing in Sloans Lake had 12 showings in the first week plus 30 potential buyers through on Sunday.
• Larimer County—Our Loveland office is reporting good news. Showings are up and we’ve seen an increase in homes going under contract and an increase in open house activity. This continues to play out the forecast that there is pent-up demand in the market as more consumers realize now may be a great time to buy. Existing inventory will continue to decrease until we get closer to April.
• North Metro—The North Metro office continues to take significant numbers of listings in all price ranges. We are still patiently waiting for bank approvals on REO and short sale properties. However, many buyers are beginning to realize their increased purchasing power with lower interest rates and our Agents are showing a lot of property to qualified buyers. (As an aside, this reminds me, did you read this month’s Reality Check message? It is completely focused on how changes in interest rates may affect a buyer’s purchasing power and it would be a positive tool to share with your clients.) Sellers are showing great interest in pricing their homes to sell which is a welcome trend for our market.
• Parker—Parker and Central Douglas County still show an increase in activity. Showings are up substantially and we are getting more new listings in as well. We had a number of multiple offers on Power Priced Listings which are not limited to bank-owned or short sale properties. The outer areas of Douglas and Elbert counties are still slower, especially above $400,000. We do not expect those markets to show any major signs of improvement in the immediate future.
• Southeast Metro—Showings for our Southeast Metro at DTC office have been steadily increasing as we are close to 500 showings a week. Finally buyers are coming off the fence. The best example of this is a multiple offer situation on a listing that went on the market last July. Several showings and multiple offers later, this property is now under contract well above the list price. With over 100 properties scheduled to close already this month, the office is predicting a strong 2009.
• Southwest Metro—Agents are starting to get excited about the year. Floor calls are on the rise. Agents are getting calls from their sphere regarding the market and whether or not now is a good time to buy. It seems like some buyers are finally getting off the fence.

What I’d like to leave you with this week is this: it’s time to get in a position of optimism. We are in a great position for a turnaround. But we also must understand that this isn’t going to be an easy road. The road we took to get here wasn’t easy and the road ahead may be a challenge. But the up side is that we are on the road to recovery. Our market has been in neutral for some time and now it is time to put it in drive. The Economic Stimulus Package. The release of the second half of the TARP funds. These are all things that can and should help. Now it is up to our economy to do the rest.

Let’s watch as the details unfold over the next few weeks and we’ll wait to see whether the $787 billion in aid is our nation’s answer to prosperity. All we can do is hope and remain optimistic.

Until next week,

Chris Mygatt
President and Chief Operating Officer
Coldwell Banker Residential Brokerage Colorado