We are now 1/3 of the way through 2011 and at least the question of the tax credit effects are answered in spades. Last year the tax credit to buy a home expired on April 30th and as you can see by both the pending sales (down 30% ) and closed (down 20%) can leave no doubt in any one's mind to question of "if you give people $8,000 to buy a house will they?" Of course any time you take an action the law of physics demands that a complete an opposite reaction will occur. So now the market gets to experience the withdrawal of the tax credit support. When you consider both price decline and the increase in size of home purchased through April of both 2010 and 2011 you see an approximate 6% decline in the sales price of homes. I would suspect that as we move away from the market effects of the tax credit pending sales year over year will approach parity, yet closed sales over all for 2011 will probably by off by about 10% by the end of the year.
With interest rates and prices where they stand if you are thinking of buying and planning to stay put for 5 years, my belief is you will be better off than renting since the rental market is tightening both in Yellowstone County and the nation and a tight rental market will drive rents up over the next one to five years. Comparing the average payment for the average sales price home with taxes and insurance (about $1,237per month) to the average asking price for a three bedroom home with a garage at an average rental price of $1,157 you can see what I mean.
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