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Dynamics of the local housing market

Dynamics of the local housing market

Rob Wolverton is president of R. Anthony Development Group LLC. [email protected]
The market seems to have stabilized at this point, but it has stabilized at a lower level. In other words, until something happens to the demand side of the equation, meaning new jobs and growth, the market we see today is our reality.
In the first quarter of 2009, there were 216 detached single-family homes sold in the Columbia School District that went through the Columbia Board of Realtors Multiple Listing Service. Of those 216 homes, 26 were new construction.
In the first quarter of 2010, there were 231 homes sold with the same criteria. Of those homes, 39 were new construction. This shows an increase of about 7 percent in total homes sold and an increase of 50 percent in new construction homes sold.
If we go back to the first quarter of 2009, we had a new president take office, and the stock market was dropping like a stone. On a national and local level, there was much greater volatility and uncertainty. In the first quarter of 2010, there is much more stability on a national and local level and a much higher level of overall confidence.
Some key points:
The average listing price for 2010 per the CBOR MLS is $198,697. The average listing price for 2009 was $208,894.
The median listing price for 2010 is $155,000, and the median for 2009 was $159,900.
The average sale price for 2010 per the CBOR MLS is $151,763, and the average for 2009 was $159,835.
The median sale price for 2010 is $135,250, and the median sale price for 2009 was $147,719.
The average and median listing and selling prices are down in 2010 from 2009. This shows strength in the entry-level home market and weakness in the upper-level home market. So now is an extraordinary time to be a “move-up” buyer.
It can be effectively argued that the homebuyer tax credits are creating the strength in the entry-level home market. I do agree that they are having an impact in this market, but the equation is much more complex than giving all of the credit to the enactment of homebuyer tax credits.
The real truth is that the entry-level market has always been the healthiest part of the market. The strength we experienced in the upper-level markets in the period of 2003 to 2006 was an anomaly. Again, our current market is our reality until there is a significant change in the demand side of the equation.

Do homebuyer tax credits work?

The short answer to this question is “yes” but maybe not in the way we expect.
The homebuyer tax credits are extraordinarily effective in moving money from federal control (the least efficient use of money) and infusing those funds directly into the private economy (the most efficient use of money). These credits do not create new buyers.
These credits will move buyers from being 2011 buyers to 2010 buyers, which is positive. In fact, I do not think 2010 will be a banner year in number of sales because I believe a large number of 2010 buyers became 2009 buyers due to the enactment of the first-time homebuyer tax credits last year. This, of course, could change with the addition of a significant new employer who would bring new jobs to the area.
The effectiveness of the homebuyer tax credits is that new home buyers now have money in hand to finish a basement, remodel a kitchen or bath, buy a new lawnmower, buy blinds and many other needs that arise when purchasing a home. In years past, a large number of these expenses were purchased on credit cards and other forms of short-term credit, which is not healthy for our overall economy. With homebuyer credits in hand, homebuyers can now purchase these items with cash, which is very healthy for our overall economy.
No one really knows if Congress will renew the homebuyer tax credits due to expire June 30. If they asked my opinion, which they won’t, I would like to see the home buyer tax credits become permanent and get rid of the mortgage interest deduction, which I believe to be marginally effective at best.

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