Market Trends Post Tax Credit

April 30th has come and gone and along with it the chance to qualify for the first-time home buyer credit of $8000.  What’s next?  Do we expect our Bluegrass homes to decline in value? Should we expect the market to go down greatly?   The answer is no.  According to a survey just released by Prudential Real Estate and Relocation Services, although more than 90% of consumers believe that the home buyer tax credits have helped both first-time home buyers and the U.S. housing market overall, among consumers actually shopping for homes, 65% believe that the end of the tax credits will have little or no effect on their interest in purchasing a home.

That’s good news for all of us.  While it is true the tax credit certainly did the trick we also know that people will always have a need to buy or sell a home.  Regardless of the economy families will experience the joy of bringing new babies into the world, thus the necessity for larger living quarters. People will marry, divorce, die and graduate which also demand a change in their life and living circumstance.  Plus the fact that interest rates are still phenomenal also promises continued activity as evidenced by additional survey results which indicated among those who have already purchased a home, 61% cited low mortgage interest rates as “very important” to their decision.

As for as the dream of home ownership and the perception that owning a home is a good investment, among current renters 75% still believe owning their home is a better long-term choice for their needs than renting.  The survey goes on to show that the majority of consumers also believe that home ownership is a better investment than individual stocks or bonds (75%), mutual funds (72%), or savings accounts (74%). As a summary Earl Lee notes, “the real estate market is precariously balanced.  Consumers are clearly motivated to take advantage of the opportunities the current low interest rates and prices afford. While the market is picking up in terms of sales and confidence, and the majority still believe that owning a home is a good investment, the outlook for the market remains highly dependent upon the direction of the economy overall.”