Once again there is good news in the real estate market and another reason to consider entering the field by getting your real estate license. There is further evidence of the housing market turnaround as October marks fifth month in increases of home prices in 20 United States cities. Although the year over year median home prices from October of 2008 are down 7.3%, it is the smallest decrease in prices since October 2007, just .1 % higher than the decrease that was anticipated by market economists.
The decision of the Obama Administration to extend the tax incentive program for first time homebuyers as well as including an additional incentive for existing home owners has been effective in protecting against further weakening of the market. These tax incentives and some of the lowest interest rates ever offered have helped to regain over a quarter of the value lost due to the housing crisis over the previous two quarters alone. When you consider that the loss topped out at an unheard of 17.5 trillion dollars in value lost since the middle of 2007, 28% is a tremendous turnaround in six months.
June 2009 marked first months increase since June 2006. Seasonally adjusted median prices for the U.S. cities have been rising steadily each month since June 2009. Eleven out of the 20 cities had increases from the prior month at seasonally adjusted basis with San Francisco having the highest increase from September 2009 to October 2009 with prices rising 1.7%.
Those people who have their real estate license know, commissions have been at an all time low given the dramatic drops in housing prices began in 2007. If you have your real estate license you understand that the commissions you earn are tied to directly to the housing prices, so it has been harder than ever to make the levels of commissions that were so easily attained prior to the housing crisis. The stabilization of the real estate market and slow but steady increases of the housing prices will begin to bring about the return to the potential earning capabilities that real estate licensed professionals were used to seeing.
Much of this turnaround is due to the first time home buyer incentive offered by the Obama Administration. According to Lawrence Yun, chief advisor for the National Association of Realtors, there have been two million people so far that have taken advantage of the tax incentives offered by the current administration, and that estimation came prior to the extension of the program through April 2010. It is anticipated that the draw of the expanded tax incentives along with the still low prices available to buyers will attract millions more potential home buyers and further stabilize the nation’s real estate market.
Foreclosure rates continue to be a concern as high unemployment rates are still a potential obstacle in the housing turnaround. With the record number of foreclosures possibly growing as unemployment tops 10% in the country and pending adjustable interest rate mortgages are ready to reset. As the Administration continues to implement its economic recovery package and the job market also begins to stabilize, the foreclosure rates should begin to slow as well as the final pieces to the economic recovery puzzle are put into place.
Five consecutive months of increased home prices is a great sign of the stabilization in the housing market on the horizon.
