Common belief would say that the tax credit offered a fantastic opportunity for many people to buy homes.  And it certainly did across the lower to median price ranges.  However, there's a new trend that says buying today may afford some home buyers a better deal today.

In the markets the Matt Evans Team works in Northwest Indiana and Northern Colorado, home supply at and below median home price became quite low with the tax credits in effect.  So low, in fact, that month's supply of inventory dropped to 3 months or below at the lower price ranges, or under $200,000 in both markets.  A balanced market has a 6 month supply, where it's neither a buyer or seller's market.  Homebuyers were having a hard time finding what they wanted, and had to act quickly or lose the deal. If they could find a home, sure the $8,000 was a fantastic incentive, especially on a home around $100,000 where it returned 8% of value immediately. 

While home supply is still low on the MLS, the time crunch to buy has eased and inventories are starting to balance a bit.  The other balancing factor is that interest rates for home purchases have now dropped to historical lows.  This means that for a loan of around $250,000, at an interest rate of 4.6%, today's purchaser's payment would be around $1281.  But back when interest rates were around 5.75% during the tax credit, their payment would have been $1458 or so, meaning a savings today of $177 per month! 

What this means is that the market for homes priced above median should begin to increase with the lower interest rates.  Especially since the rate for jumbo loans on luxury homes has now dropped to 5.75% from it's mark a year ago of around 6.75%, premium home buyers are benefitting more today from lower interest rates and good inventory selection.

Sure the $8,000 "today" that the credit provided was better than $8,000 "tomorrow", but since many people didn't qualify for the tax credit anyway, perhaps more buyers are benefitting today from the lower interest rates. 

So, with daily consumer spending recovering fairly well, and employment stabilizing, the home market should continue improvement over the next several months.  Volume may not continue to be a strong as with the tax credit, however average purchase price may begin to rise as a result.  Our forecast is that good deals will continue for buyers in many aspects, but that sellers should see a strengthening in the market toward the middle and higher prices if interest rates remain low.  If you are looking to buy or sell a home in Northwest Indiana or Northern Colorado, speak with our team today and talk to our preferred lenders to learn more. 

Matt Evans, The Matt Evans Team of Keller Williams Realty

www.themattevansteam.com   www.mattevansrealestate.com