Pending sales of existing homes in January were up 15.6% over January 2009 according to TREND MLS. Also the median price was up 2.3% over last January. Sales since August have risen every month over the prior year. The biggest reasons are the $8,000 tax credit for first time homebuyers, the low interest rates and an attitude that the economy is modestly improving.
In the first 45 days of 2010 pending sales rose, rates fell under 5% for a 30 year fixed mortgage, a $6,500 tax credit is now available to the so-called move-up buyer and the $8,000 tax credit is still available for the 1st time buyer. What has not helped the real estate market are 2 things: the record snow and the uncertainty regarding jobs. The weather and snow, like this year delay the buying process. However, with the tax credits having a deadline of signing an agreement by April 30 and settling prior to June 30, that will cause many buyers to get in before these deadlines.
The market that has been the most active is the under $350,000 price range. In many areas houses under $350,000 are selling better than they did in 2007. Houses priced between $350,000 and $500,000 are showing signs of life as the move-up buyer starts actively looking/buying.
Pended sales under $350,000 accounted for 81% of the total sales in January. Pended sales between $350,000 and $500,000 account for 11.9% of the sales. Houses over $1,000,000 accounted for less than 1% of total sales in January 2010 and were the fewest in 7 Januarys. Houses are selling at 90.94% of last asking price up from 89.89% last year. In January 2006 houses sold at 95.66% of asking price. The highest median pending price for a January was in 2007. This January saw the median pending price come within 4.4% of that high showing the recovering market.
So to sum up, the government has given tax credits to spur housing and the Fed has purchased mortgage backed securities to keep interest rates at record lows causing the market to improve over the last 5 months. These mortgage purchases will end in the next few months which will cause interest rates to rise and the tax credits end April 30. The extended and expanded tax credit, along with historically low rates present a great financial benefit for buyers and sellers to purchase/sell in the next 2 1/2 months.