Winter 2010

 In a down year for the economy, the housing market has offered some glimmers of hope. Home sales have improved, recently hitting their highest level in more than two years. There's been talk of bidding wars resuming in places like Silicon Valley and New York City. And cocktail party chatter everywhere has started to turn to talk of hitting the “bottom”. So at least where housing is concerned, things are looking up…  

The bottom line is that housing is more affordable and new construction is still at a low, so sales will eat up excess inventory. We're moving in the right direction, and that's reason for optimism! 

In an article published in Fortune Magazine on December 9, 2009, entitled “Housing Outlook for 2010” author Beth Kowitt reports that Cleveland, Ohio will bottom out in 2010 and actually see appreciation in 2011.  This change of direction is great news for our local buyers, sellers, and of course realtors! 

It is also important to recognize the following activities are bound to result in higher home prices and higher interest rates in 2010:  

1.       Higher appreciation in values has started on a gradual upward swing.  So, the longer you take to buy, the higher the purchase price will be, especially if the public overcomes current fears. 

2.       The Federal Tax Credit Program is scheduled to end with contracts written after April 30, 2010.  While this doesn’t increase or decrease sales prices or interest rates, it does take away a major incentive for 1st time buyers, which is a key reason for our improved market activity. 

3.       Whether you love or hate what is happening in our Nations Capitol, one thing is certain; it is inflationary and inflation almost always means higher interest rates.  The government has been buying billions of $$ in their own Treasuries and Bonds, which has kept interest rates artificially low.  They will stop that very soon.  Additionally, when the Federal Government spends money the way they are now, it causes interest rates to go up.  The last time we saw the Federal Deficit represent such a high percentage of the GDP, we experienced the highest Mortgage rates in history.  While I am not necessarily predicting rates will rise to that extreme, I am 100% certain you will see interest rates begin to climb. 

Needless to say, if you plan to make a move in 2010; it is evident that best time to do so is RIGHT NOW!! 

I would encourage you to forward this to anyone you know looking to buy or sell a home. Buyers need to be actively looking at homes today in order to get the best deal they will get in 2010. 

 
 

Summer 2009

Is It Getting Better?
The graph below shows the number of homes for sale and the number of homes sold over the last 24 months in Cuyahoga County.

In July 2007, the number of homes for sale was at an extreme high of about 14,800 units. This past July, the number of homes for sale was 9,725 units-  an inventory reduction of 34%. We also see that the number of homes sold over that same time period is down,  but only by 24%.

What this means is that our market has, over time, been absorbing the extra inventory that was saturating it for so long. That abundance of  inventory is what created this so called “buyers market” and has keep it there for the past few years.

 

 The second graph below shows the average sale price for the same 24 month period. We see that the average sale price is back on the rise and it is only off 15% from July 2007. Keep in mind these numbers include many foreclosures or short sales which have been dragging down home values. 

If we go back to 2003, which is approximately when our market’s home values peaked, the average sale price is down about 20%.  It is important to remember that each neighborhood has been affected differently.

 

A major reason for the recent increase in sales has been the $8000 first time home buyer tax credit. Of the 10 homes we sold in May, 7 were first time buyers taking advantage of this government stimulus program.

 It will be interesting to see what happens to sales once the program end’s this winter.  I assume we will see a bit of a lull until next spring. At that point, it will be up to our local economy to get things back on track. If that happens, we will be near the end of this slide. Only time will tell!

 
Ed Huck Team
440/617-2500
ed@edhuckteam.com
30400 Detroit Road Suite 202 Westlake, Ohio 44145
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