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The Next Wave.

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The end of the first time home buyer tax credit is right around the corner.  Lenders, realtors, and clients are scrambling to get into contracts, and get the process moving.  The tax credit has created a lot new customers, but is it enough to sustain after the credit goes away?  That is a hard one to say for sure.  What is known, is that there are a lot of homes that are sitting on the sidelines.  That will be the story of 2010.

The graph below shows how many homes are late on their mortgage, but have not started the foreclosure process.  Crazy, huh.  That is why I hold to my prediction, below.

Homeowners late on their mortgage, but foreclosure has not started
Homeowners late on their mortgage, but foreclosure has not started

My prediction?  Once the tax credit goes away, the average price for a new home will drop at least $8,000.  And, the price drops will continue as Fannie/Freddie release the homes they have sitting on their books.  Below is a great chart from Keeping Current Matters.  This is a great real estate blog that I follow.  I recommend reading it.

It may be a good thing for buyers if prices drop more, but a bad thing for those selling, or trying to refinance.  Keep in mind though, buyers, that a price reduction of $20,000 is negated by an interest rate increase.  And, folks, that is where things are headed.  Up.


More info on www.JakePlanton.com


Comments (4)

Charles Edwards Bentonville
Coldwell Banker Harris McHaney & Faucette 479-253-3796 - Bentonville, AR
AR REALTOR, Bentonville Real Estate Agent and Broker

Wow. Interesting stats, insightful but maybe a little scary at the same time.

Apr 19, 2010 07:53 AM
Chris Alston
Chris Alston (Keller Williams Realty, Silicon Valley, California) - Campbell, CA
Silicon Valley, California

Interesting stats!  Thanks for sharing. I like the visual nature of the post.

Apr 19, 2010 08:01 AM
Jake Planton
www.JakePlanton.com - Portland, OR

Thanks Charles and Chris!  Much appreciated.

Apr 19, 2010 09:31 AM
Jake Planton
www.JakePlanton.com - Portland, OR


More info here.

Yesterday I wrote about how there is this HUGE supply of homes that are not on the market, but are awaiting banks to put them on the market, the 'shadow inventory.'  I just read this article from Diana Olick at CNBC,article here, about how much there really is.  She used an example of the DC housing market.  There is a reported 5.1 month supply in DC. But, if you add in the estimated 'shadow inventory,' you get a 13.2 month supply.  That is what we should be worried about.

Great article from Diana.


Apr 20, 2010 05:55 AM