Home Sales Slowing with End of Homebuyer Tax Credit
June sales numbers were buoyed by the homebuyer tax credit. Although the tax credit closing deadline was extended by three months, the air is out of the tax credit balloon.
Palm Coast, FL – July 23, 2010 – Sales of single-family residential homes through MLS in Flagler County for June 2010 mirrored those of June 2009 but the housing market factors underlying the two months are not the same.
I believe that analysts overreact to minor fluctuations in market behavior. The stock market is a clear example of what I’m talking about. Analysts need to justify themselves every day. But how do you explain a drop in the DJIA of only a few points? I’m sure the analysts have a list "A" of reasons why the market goes up and another list "B" of reasons why it goes down. If the market is off a few points, analysts grab reasons from list "B." A slight rise prompts selections from list "A."
What can we conclude by comparing June 2010 home sales to June 2009 sales. I’m inclined to pick a few reasons from each list.
|
|
June 2009 |
June 2010 |
|
Homes Sold |
136 |
142 |
|
Median Selling Price |
$139,000 |
$137,200 |
|
Median $/Square Foot |
$73.50 |
$71.50 |
|
% Distressed Sales |
53.7% |
52.8% |
|
Total Sales |
$24,146,694 |
$24,676,62 |
The chart tells us that the market is unchanged. But that’s not really true because circumstances are not the same. Last June, the Flagler market was increasing in the number of homes sold, but median selling prices were still declining gradually. We’ve discovered recently by looking at graphs like the one below that June ’09 was hinting at a slow turnaround. When the number of homes sold reverses direction, it takes months for the median price to react in the same direction.
July 2010 was under different market influences. The number of homes sold had been on the rise for several quarters. Prices had stabilized. June actually showed a slight increase in the median selling price over May. In fact, June’s median selling price was the highest since November 2009.
Overriding all this analysis was the government’s June 30 market deadline for the homeowner tax credit. To qualify, contracts had to be signed by April 30 and closed by June 30. The closing deadline was eventually extended by three months, but only after the June "rush to close" had ended. Contracts still had to have been signed by April 30. The only way we will know the effect of the tax credit’s demise is by looking back in a few months. The number of homes sold in July to date is not promising nor was it expected to be. It will certainly not equal July ’09 sales. Yet, July prices to date are slightly above June’s prices.
As in recent months, foreclosures include a number of up-scale properties. The 159 Lis Pendens filed in June included:
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Beach Haven – one lot
-
Canopy Walk – two condos
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Cinnamon Beach – one home
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Conservatory – two lots
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European Village – two condos
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Grand Haven – one lot and two homes
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Hammock Beach – five condos
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Hammock Dunes – one lot and one home
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Marina Cove – one condo
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Ocean Hammock – three lots and one home
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Oceanside at Beverly Beach – one condo
-
Ocean View Manor – one condo
-
South Beach – one condo
-
Tidelands – four condos
-
Yacht Harbor Village – one lot and three condos
Mortgage rates are at record lows, but buyers still face hurdles. Underwriting requirements are much tighter than in the recent past. Some of Flagler’s condominium communities don’t qualify for Freddie Mac or Fannie Mae lending programs because they have too many delinquent association fees or too many foreclosures. The restrictions limit the pool of buyers to those with cash or private financing.
Looking forward, there are still lots of distressed properties coming onto the market. But eager buyers are plentiful. Today’s prices (often below replacement cost) are low enough to allow investors to accumulate rental properties. Unlike neighboring Volusia County and other parts of Florida, Flagler’s population continues to grow, if only slightly. The single factor that will have the greatest impact on the local housing market is JOBS. Without jobs, we can look forward to a long slow turnaround. To that end, I hope readers will understand that the Economic Development referendum on the upcoming ballot represents an inexpensive investment in our area’s future. More on that in a future commentary.
One recent state law should diminish the number of foreclosures of homesteaded properties. [read story] Another increases condo associations’ leverage to collect delinquent assessments, even allowing them to intercept rent payments from tenants occupying delinquent units.
Those in a position to buy should begin taking advantage of this unique opportunity. The buying window may be long, but it has clearly begun.
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Modificatin
I have several clients in the Miami area who have been offered a loan modification where there loan balances have been sugnifigantly reduced and lowered interest rates. They were up to date with there loan payment. several accepted the arrangements. If the banks extended this program to a larger market it would close the gap on future short sales and foreclosures. By the way the properties were investment properties and rented. The effect to the bank was similar as a short sale. They did not request the modification but were contacted with the offer.
Which banks offered this kind of loan modification
Hi, which banks offered this kind of loan modification? It would be good to know what to expect. Thanks