Metrostudy: 'Tax credit hangover' is over
You never know for sure if the first upturn in home sales after a stretch of decreases is a blip or a trend until you can look back with 20-20 hindsight, but a homebuilding market research firm is ready to call December the start of a new era.
"The fact that sales are positive on a year over year basis, and that contracts continue to trend higher in many submarkets, indicates that the 'Tax Credit Hangover' is done," writes Kenneth Wenhold, Mid-Atlantic regional director for Metrostudy -- referring, of course, to the federal homebuyer tax credit that phased out last summer.
And here's something you don't see every month: The Baltimore suburbs saw a bigger turnaround than the Washington metro area. (The Baltimore area was worsening from a seller's perspective in the fall, so we have farther to go.) Sales rose eight percent in the local suburbs Metrostudy focuses on -- Anne Arundel County, Baltimore County, Cecil County, Harford County and Howard County -- while, for instance, falling 3 percent in Northern Virginia and 12 percent in D.C.
Here are a few more of Wenhold's Baltimore-area market musings:
Unfortunately listings are up 10%, muting the effect of the additional activity. However the months of supply declined by 0.6 months to 10.0 months, representing the first significant decline in inventories in nearly a year. Harford, Baltimore and Howard lead the pack in gaining inventory, while Baltimore and Harford account for the majority of increased sales. Prices are negative, though the various submarkets seem to be fluctuating between single digit gains and losses on alternative months. New contracts are now positive or flat in nearly every submarket, with Harford seeing the largest increase, most likely due to immigration of workers affected by the BRAC initiative.
This is the slow time of year for sales and new listings, as Wenhold notes, so a key test of market momentum will come in the spring. Who will emerge in greater numbers, new would-be buyers or new would-be sellers?
While you're chewing over that, check out this new chart put together by RealEstate Business Intelligence, Metropolitan Regional Information Systems' stats arm. It shows the last two years of pending sales in the Baltimore metro area -- city and surrounding counties -- compared with the trend in home prices for sales that closed.
RBI's take on December was in the "on the one hand ... on the other hand" vein. For instance: "Seasonal holiday slowdown is evident by decline in December pending sales but decline was less than normal." (That's December vs. November, not year-over-year.)
Also: "Buyers and sellers signed 9.7% more purchase contracts in December 2010 than they did in December 2009. However, the increase in pending sales (to 1,643 from 1,498) over this period was largely due to a two week lull in activity in December 2009 as consumers waited between the first, and then second, expanded federal tax credit home purchase programs."
The tax credit might be gone, and maybe even the sales hangover it caused, but it'll still be throwing a wrench into comparisons for a while yet, apparently.
What's your take on the hangover? Done or no?
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Comments
I can only speak anecdotally about myself, but so far this has been the busiest January in years. I don't see people coming out this much usually until Feb/March. Maybe it's the uptick in interest rates has people deciding to jump in before they get too high - some have said that. Maybe it's that prices are reaching a point where people are interested again. It could just be a cyclical thing - a number of my buyers are "move-up" buyers who have been in their first homes for about 5-6 years (and hmmm... what happened 5-6 years ago? haha).
I know some of the commenters here say there are more price decreases to come - that is definitely possible. But if you are buying now and selling in 5, 7, 10+ years, who can predict where the market will be then? I wouldn't trust anyone to predict that far out; it's a dart throw. If you told someone in 1995 their $100k house would be "worth" $350k in 2005, they would have laughed in your face.
Posted by: John K. | January 13, 2011 7:38 AM
...and when you tell someone in 2015 their $350k home is now "worth" $100k, they will punch you in the face
Posted by: Darwin Rules | January 13, 2011 11:32 AM
No punching, please.
Posted by: Jamie Smith Hopkins | January 13, 2011 11:38 AM
Home sales in Wake County, NC (Including Raleigh, Cary, Wake Forest, etc…) dropped 9.2% in 2010 over 2009 while homes listed for sale increased a nominal .6% through November.
I'm still tracking the tax credit and how it affected the market in Raleigh. Our median price dropped and the traffic pattern for home showings trended with the start and stop of the credit. I have mapped the numbder of property showings each month back to 2006. I agree with your 20-20 hindsight perspective. How can we know until we have 12 months of data?
I see our market is still moving in the wrong direction (If you are a seller) but this year is showing promise as we have been seeing more cash closings in recent months than ever before. I interepret cash closings as investors and investors spell bull market indicating a good time to buy.
http://raleighrealestatenews.com/
Posted by: Jason Graves | January 13, 2011 11:48 AM
Can't look at that chart, Jamie--it wants a user name and password. Any way you can fix?
Posted by: edward ericson jr. | January 13, 2011 12:37 PM
Oh, that's annoying. The link worked before. I've pasted it in again, and it seems to be fine, but here's a workaround if you get the prompt again: Click on the next link in the post about RBI's take on the December market. Then go to the photo link in the press release.
Posted by: Jamie Smith Hopkins | January 13, 2011 12:42 PM
I think i'll put my confidence in actual numbers over anecdotal non-sense about actiivty. Watch the below link (which is what i have been spouting for years). The case shiller index isnt a guess. It tells you EXACTLY what is going to happen. And dont forget, bubbles alway OVER correct in the other direction. Its called capitualation, where everyone runs for the exits. We're not there yet because of all the knife catchers.
Baltimore hasnt even felt it yet like the rest of the country because we are suckiling off the gov't bossom with our proximity to DC. When federal spending takes a dump, so will the surronding economy.
http://www.tradingstocks.net/html/housing_market_bubble_bust_cyc.html
Posted by: elweedz | January 14, 2011 12:39 PM
Darwin Rules, that was hilarious. XD
Posted by: JuanitaBeasley | January 19, 2011 7:23 PM
What a looneybird site that is, elweedz... Too busy with graphs to use proper grammar and spelling, I guess.
Let's all hoard our gold in Glenn Beck's basement and just walk away from all our mortgages! Yee-haw!
Posted by: Cuckoo | January 19, 2011 11:06 PM
Cuckoo- Do you have any actual counterpoints to make or is spelling and grammar the extent of your arguements?
Elweedz owns no gold nor is a fan nor detractor of Glenn Beck. I seldom watch him. The meat of my post and the graph was Robert Shiller, a Harvard Grad, and his now famous data articulating the return to the mean.
While rote rehearsal of grammar and spelling rules might win you some spelling bees, there is no real value in society to those that master those skills.
Posted by: elweedz | January 20, 2011 8:01 PM