Minnesota Real Estate Investors Association, Inc.

Home Sales are Up!

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In the news lately the headlines are all about the higher than expected home sales. June saw an 11% increase in the number of homes sold compared to this time last year. However, if you listen to the reports or read the articles, buried somewhere in the story will be the caveat that while the number of home sales is up and that prices in some areas are stabilizing or in some places actually decreasing, is that the available homes for sale is at the lowest levels in a decade.

So why have home sales increased? There are a few reasons to explain the home sales increase as of late and the increase in sales prices as well.

  • The $8,000 first time home buyers tax credit expires on December 1, 2009. So anyone who can take advantage of this has to do so now, because no one knows for sure whether or not congress will extend the tax credit.
     
  • Because of all the foreclosures, many investors are buying up REO’s as quickly as they can.
     
  • Fannie Mae and Freddie Mac had a moratorium on foreclosures from November thru March. They started filing foreclosures again in April, so those properties will not start hitting the market until later this year.
     
  • A lot of homeowners who normally would be selling simply can’t sell their houses right now because they owe more than the properties would sell for, so they are staying put for now.
     
  • Some homeowners, who could actually sell right now, know that they couldn’t qualify for a new mortgage.

I have talked to a lot of homeowners who would love the opportunity to buy a move up property right now because they could get such a good deal in today’s market. The problem is that they can’t qualify for a new mortgage today, even if they could sell their property right now.

All these reasons have caused a shortage of inventory right now and there are a lot of buyers trying to take advantage of the good deals from the Banks. This has also caused a multiple offers situation on most properties.

I believe that this will last till later this year. When the tax credits either expire or extend, there will no longer be a rush to close before the deadline. Prices will have stabilized and even increased to a point where some homeowners will now be able to sell without having to write a large check at closing and the bank REO’s will start flooding the market. And if things go well, the credit markets will begin to loosen up, allow even more people to qualify for a mortgage so some of those move-up buyers might also be able to start selling their current houses.



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