As of March 30th the government stopped purchasing mortgage backed securities thus putting private investors back in control of mortgage interest rates. The under contract deadline for the extended first time buyer credit is the end of April. Will this effect the overall market conditions?
When considering the above putting the interest rates back in the hands of the investors was the first sign of actual capitalism we've seen in a while. Letting the free market operate as such is certainly a step in the right direction. It may mean that rates trend upwards over the next year, but they should remain quite competitive. Higher interest rates aren't necessarily bad overall, because CD's and savings account interest rates should trend upward with mortgage rates.
The tax credit is a further incentive to promote home sales but had surprisingly less significant role than most real estate professionals expected. It could have been the November rush before the first expiration or simply that fact that not all people were enticed by $8,000. I'm of the mindset that if something like the credit is available we should take advantage of it, but not all people feel the same.
So lets look at difference between 2009 and 2010.
Evaluating Adams County as a whole looks fairly decent, but considering the tax credit and the favorable rates I think we all would have liked to see a higher overall volume. Total units sold was +1 over last year, but average sale price is down 3% since 2009. I'm surprised that Gettysburg had the worst overall comparison to 2009 because Gettysburg is typically one of the hotter Adams county markets.
York showed a nice, 10% increase in units sold, but realized a slightly larger average sale deficit of 4%. In general most of the major school districts in York County showed positive growth compared to last year.
At the very least it seems we've leveled off a bit in terms of volume. Perhaps the current market more accurately represents the local market post bubble. A few more months with similar numbers should paint a pretty good picture of what we can expect over the next few years.
Hardship due to short sale, foreclosure, and job loss will certainly handicap a lot of potential buyers from entering the market due to wounded credit scores and low consumer confidence.
Follow me on Twitter - I plan to do some graphical analysis of active, pending, and sold listings for the past 18 months to see what kind of trends we are seeing.
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