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:
- Boulder/Longmont—The 3 day snowstorm caused a real blip in the numbers last week, with sales, listings, and showings all down. The good news to be gleaned is that even though sales and listings were both down about 20%, showings were only down a little over 10%, so there is still real buyer activity out there.
- Evergreen/Conifer— All activity negatively affected by two snowstorms during the reporting period. Our office closed for 2 days. Snow totals ranging from 2 to almost 4 feet in market area. Activity gradually returning to more normalized levels. Total of 108 showings during the prior month- 35% of activity in price range under $200M & 25% from $200M- $300M. Noticeable increase in activity in $400M-$500m range as well as $500M-$750M ranges
- Denver Central – No information reported.
- Devonshire—No information reported.
- Douglas County—Our Southwest Metro office reports showings were down but this had a lot to do with our weather this past week. Agents are very busy showing buyers homes as the deadline is very near for the 8000 tax credit. We are seeing sellers gearing up to list their homes by the beginning of next year. We did have success in our open houses this past weekend and floor calls have been great. Our agents are very busy trying to find homes for first time buyers and are very excited about the news of the extension of the program as well as the new credit available for current owners.
- El Paso County— Colorado Springs reports we have experienced a drastic slowdown in showing and sales activity. The listing inventory is steady and a high number of closings is scheduled for the end of the month. The expected extension/expansion of the home buyer tax credit is taking some urgency off the buyers as well of some sellers that have planned to put their homes on the market before the holidays.
- Larimer County—No information reported.
- North Metro—No information reported.
- Parker— Although showing activity has slowed down again, the sales activity is was steady even with the approaching deadline of the tax credit. It seems that buyers are confident that the extension/expansion will be passed in the House as well. Power priced listings still sell very fast. If the tax credit extension is going to be passed, we expect some sellers to hold off putting their home on the market until after the holidays. We have 154 properties scheduled to close and sellers are enjoying an increase in buyer activity. Even with the colder weather, we're averaging over 500 showings a week so far for the month. The luxury home market is also seeing an uptick in traffic as 20% of our luxury home listings are currently under contract.
- Southeast Metro— The surge of first time homebuyers continues! We are experiencing multiple offer situations in several price points and specifically homes over $250,000. Some of the homes that have been in multiple offer situations have been on the market for awhile and are a direct result of the time crunch for the tax credit. We have placed 120 properties under contract this month and we will close over 150 units. November is looking great with 100 units already scheduled to close! Despite the unpredictable weather, open house traffic continues to be strong and serious buyers are out there!
- West Lakewood— No information reported.
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,
Chris Mygatt
Coldwell Banker Residential Brokerage Colorado
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