I recently wrote this article for a Texas Publication-- THE TEXAN.
Should Texans Be Buying Real Estate Right Now?
In these economic times I think that most Americans, Texans, investors, and homeowners are keeping a close eye on the Real Estate market. And rightly so… besides the stock market, the health and well-being of the Real Estate market has been a good indicator of our financial fitness as a state and a nation.
According to data provided by the Real Estate Center at Texas A&M University, Texas’ housing market saw increases in sales volume and price in the fourth quarter of 2009. As reported in the first Texas Quarterly Housing Report, Texas’ sales volume for single-family homes for 2009-Q4 was $53,050, up 16% from the same quarter of 2008. The median home price in Texas also saw increases, from $140,100 in 2008-Q4 to $143,400 in the same quarter of 2009, a 2.35% increase.
“While figures throughout the last quarter of 2009 were positive compared to 2008, they were particularly positive in October and November, which makes it clear that the first-time homebuyer tax credit is having an impact in Texas,” says Jim Gaines, Ph.D., an economist with the Real Estate Center. “The increase in median price also stands out, particularly compared to national figures, which are down substantially.”
Texas also saw a decrease in the number of months of inventory in the market over the quarter, from 6.6 months to 6.5 months. Months inventory is an indicator of the supply of homes for sale in a market relative to the demand for homes. The Real Estate Center typically uses 6.5 months as the benchmark for a balanced market, meaning a reasonable supply of houses is being offered for sale relative to demand on a monthly basis.
“This was the lowest inventory we had all last year,” Gaines says. “There could be two reasons for that. First, Texas did not have major problems with foreclosures compared to other parts of the country, so our market wasn’t flooded with inventory of foreclosed properties. Second, sellers may have been discouraged at local market conditions and chose to either not list their property or take if off the market.”
Bill Jones, chairman of the Texas Association of REALTORS®, commented on the results: “We’re encouraged to see Texas’ real estate market performing well, both in terms of sales volume and price. Our state has been fortunate throughout the economic downturn and it’s encouraging to see that continue with robust results like these.”
With the federal home-buyer tax credit expiring at the end of April, many potential buyers are wondering if they should rush out to buy a home in order to take advantage of the credit. The answer: well, that depends on several things.
First, the credit is given to buyers after the purchase as part of your tax refund. You must file your taxes and ask for the refund. You still must come up with your down payment and closing costs to buy the home.
Second, The tax credit is driving prices up. Sales on quality homes in the most affordable under $200,000 bracket have been brisk. Many of these homes have been selling in just days, thousands of dollars above asking price, with multiple offers as people desperately try getting in before the tax credit expires.
Third, prices will fall after the tax credit expires: Many experts believe home prices will fall without the artificial tax credit demand currently effecting the market. Once the credit expires, fewer people will be in the market and prices should drop, at least for the short-term, as sellers and bank lower asking prices to sell homes.
With these three points understood, homebuyers should be able to make an informed decision about buying a home. If you plan on owning for 3+ years… home ownership has may advantages!
Kathy Schowe, a Texas Tech Grad is now associated with the Lori Bowers Group in La Quinta, CA. firstname.lastname@example.org.