A Review of Current Real Estate Market
The year 2009 started with a poor state of affairs for the United States real estate scene. Now there are reasons to cheer. The year ended with a bang. The month to month real estate deals concluded in November 2009 over that of 2008 is an all time record for United States. The salient features of 2009 trends are discussed below.
January 2009. The real estate slump in the United State which started in 2006 continued in January 2009. It was not restricted to the US alone. It was part of a worldwide phenomenon. Foreclosures were the rule of day.
Mid 2009. Signs of recovery in US real estate market started showing. Prices have gone up marginally at 0.4% in ten major cities. The office of Federal Housing Enterprise Oversight announces an increase 0.9% in housing prices compared to the previous month. In the Pacific region the average price rise was 2.9%. Foreclosures were still high at 33% of total home sales. Lender banks were not eager to finance home purchases.
November 2009. Congress passes a bill which extends the tax credit of $8000 for first time home owners. The new law covers many more people for eligibility for tax credit. In addition to extending time for tax credit, current owners were also made eligible for a tax credit of $6500 on certain conditions. New house ownership started rising. But unemployment rate continued to increase.
End 2009. The recovery persists. The country wide average for the increase in home sales was 5% higher in 2009 than what was in 2008. Month to month real estate deals concluded in the United State rose by 42.9% in November 2009 compared to November 2008. In some parts of the country the prices of housing has risen by up to 11% compared to previous year.
What caused the boost? The reduction in prices of real estate and the availability of money at lower rates of interest helped boost the real estate deals. Both these were actually caused by the slump started in 2006. The economic cycle has come a full circle. The tax credit for the first time home buyers announced by the Obama Administration was another driving force behind the boost.
What is in store for 2010? The economists are of the opinion that the recovery will continue in 2010 at a faster rate. Home sales for 2010 are expected to increase by 10% this year compared to last year’s 5%. There is good news for builders also. The vacancy level for new homes is the lowest now after 1970. A 30% increase in sales of new homes is expected for 2010 bringing the number to 500,000.
To sustain the economic recovery two important things are to be taken care of. There is every chance for the mortgage rates to go up. That must be controlled to prevent another economic mess. Secondly, on the employment front, the deterioration must be stopped and reversed. If the United States succeed in this, a healthy economy is not far behind.
Related Article: What is a Hard Money Real Estate Loan?
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