The New Normal

Across virtually every segment of the economy, 2009 sputtered-in as miserably as 2008 sputtered-out.  Yet in spite of its many challenges, the past year showed that it’s better to light one candle than to curse the darkness.  For if the experiences of 2009 taught us nothing else, we learned that true professionals united in common cause can truly make good things happen.

That’s how agents from Michael Saunders & Company helped re-awaken the region’s comatose housing market in 2009.  United in purpose and armed with statistics to prove the point—they were able to educate sellers to the new realities of a market in which competitive pricing is key.  Of course, it never hurts that ours remains Florida’s top destination for a lifestyle rich in world-class cultural and recreational amenities.

With corrected prices now the accepted norm and the popular first-time homebuyer tax credit renewed for another six months, buyers have rushed in and put the market on the fast track to stability.  They’ve driven up year-over-year the number of home sales by as much as 63 percent, according to the most recent monthly MLS sales recap for November.   As a company, Michael Saunders & Company is proud to announce that our agents finished 2009 with over $1 Billion in closed dollar volume and exceeded our 2008 production.  It took 30 percent more transactions to accomplish this uphill feat, but lowered prices proved the catalyst by which buyers were finally heartened to return to the market.

Even as the S&P 500 gained over 69% from its annual low, holiday sales rose and the consumer confidence index improved over 40% in 2009, economists are dubbing 2010 a “Tabletop” year for the real estate industry.  This means that having clawed its way back to a sustained level of sales activity, our market will continue in something of a horizontal recovery; without any major setbacks or much in the way of noticeable price appreciation, until the job market picks up and the inventory of properties—especially foreclosures—drops off. With unemployment showing signs of slowing, we are beginning to see the impact of our stimulus dollars at work.

Though foreclosures will remain a fact of life for the foreseeable future, they are not expected to seriously impact the floor established for properties priced below $300,000.  Supply and demand have struck a balance to where distress sales will have far less impact on homes in this price range.  Moreover sellers of competitively priced homes under $200,000 should not be surprised to find themselves on the receiving end of multiple offers.  Homes priced under $500,000 will continue to see activity and we should see increased movement for correctly priced homes over $1,000,000.

2010 is also the year of the expanded first-time homebuyer tax credit.  If last year’s version was any indicator, the new and improved tax credit will add major momentum to sales already being driven up by prices 40% off boom-time highs combined with continued low interest rates.

Under the new tax credit:

  • First time home buyers—defined as anyone who did not own a primary residence during the three years leading up to the purchase date—will receive up to an $8,000 tax credit by entering into a binding contract on or before April 30, 2010; and closing by June 30, 2010.
  • Buyers who have lived in their primary homes for at least five consecutive of the last eight years may now receive a tax credit of up to $6,500 (or, up to $3,250 for a married individual filing separately).
  • The tax credit is now available to individuals earning up to $125,000—or $250,000 for couples—on homes priced to $800,000

If you plan to finance a home in 2010, it is never too early in your search to get pre-approved for a mortgage.  When interest rates begin to rise again—as history shows they inevitably do after being held in check for so long—they spike up dramatically.  Lock-in now to avoid higher rates when the time comes to buy.

When it’s all said and done, 2010 will likely be remembered as the year when the unprecedented post-boom buyers’ market finally crested, overall stability began to creep back in; and a healthier balance between buyers and sellers became the new normal.

Written by Tom Heatherman – Michael Saunders & Company

* Follow Tom on Twitter: twitter.com/SarasotaRE

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