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Home Prices: The Next 90 Days

The next three months will be interesting for home prices. The impact of the homebuyers’ tax credit is fading from the market and so are the buyers. We must realize that in September, October and November of last year buyers were rushing to buy a home before the expiration of the original tax credit (November 30). There is no such impetus this year.

As evidence, this week’s Mortgage Bankers’ Association Weekly Application Survey showed that mortgage purchase applications were:

… well below levels seen prior to the expiration of the homebuyer tax credit, and is almost 40 percent below the level recorded one year ago.

At the same time, the Wall Street Journal reported:

Housing inventories rose in many U.S. cities for the eighth straight month in August in a sign of the continued headwinds facing a soft housing market … Inventories nationally remain at their highest levels since November 2008.

We’re back to the theory of supply and demand. Demand is softening as the supply of homes for sale is escalating.

Bottom Line

There will be tremendous downward pressure on prices throughout the rest of 2010 and going into 2011. You should sell as soon as possible if you are thinking of selling in that time frame.


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3 replies
  1. Michael Voss
    Michael Voss says:

    OMG, THE TAX CREDIT IS ACTUALLY OVER? OH NOOOO, nobody told us that here in Wisconsin. we are trying to focus more on helping buyers and sellers with thier real estate needs, and really not to worried about reading about supply and demand, tax credits and articles that are constantly repeating the same old story. and as far as the Wall Street Journal goes and any other paper across country, they have to report the doom and the gloom so they can sell thier papers.If your goal is to support us Brokers and REALTORS, get on a more positive note please, we know whats happening in the market, its kinda a no brainer.let’s spend more time and energy finding out how to keep things going in an upward direction.
    Thanks:

    Reply
    • Steve Harney
      Steve Harney says:

      Michael,

      Thank you for commenting on the blog post. There are many ‘positive’ posts we have written talking about the importance of homeownership and the reasons to buy. As a matter of fact, just two days ago we wrote on the 5 financial reasons you should buy a home right now. The purpose of the post you commented on was to let sellers know that there will be downward pressure on prices as we proceed through the year. Therefore, they should sell now. That is the same advice I would give my own father.

      As far as the papers are concerned, the National Association of Realtors is saying the same exact things. Do you believe they are also trying to report ‘just doom and gloom’? We believe correct pricing is what is needed to ‘keep things going’. What alternative do you suggest?

      Reply

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