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The Hangover Part 4
July 15, 2010
By Mike Wheatley

Halfway through the month of July now, and no huge surprises with the June actual numbers and the preliminary July numbers are showing that the market malaise continues. The one number that stands out to me is the number of Active Bluegrass homes on the market, which was 6842 on June 1. This is becoming the “elephant in the room”…we hit all time highs in July through September of 2007, when Active listings exceeded 7000 for the first time in our history. I expect to see us hit that level again in July of this year, as Pending sales continue to lag behind seasonal averages. The effect of higher inventory is usually more pressure on pricing, as sellers anxious to move their homes try to make their home stand out in the marketplace, usually through price reductions.

In the short term, my personal experience has shown that the last 2 weeks of July and the first 2 weeks of August have been a very quiet time for sales activity. I think people use that time to get in their last getaways of the summer before the kids get back in school.

On a positive note, interest rates continue to stay at or near historic lows. The impact of these lower rates is so much more significant than the tax credits that were offered, but for some reason, the public doesn’t seem to recognize that. The quick gratification of an $8,000 check from the government is more appealing than saving tens of thousands over the life of the loan. Here’s what I mean:

The following has been updated to reflect the actual numbers for June, and a projected figure for July 2010:

*July 2010 projected based on current data available through 7-15-10.
     

As always in this type of market with lots of supply, it is crucial for sellers to be priced right and have top notch condition. Buyers have so many choices today, and buying decisions can be based on what might seem like insignificant factors.

Please feel free to call or email with any additional questions you may have. My goal is always to provide accurate, professional real estate advice.

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The Hangover!
May 22, 2010
By Mike Wheatley

Feeling like the real estate market has a hangover?

Now that we are more than halfway through May, and the Tax Credit deadline has passed, the big question is…“How long will the Tax Credit Hangover last??” I wanted to update you on my analysis of the market, and in particular, the effect of the Tax Credit deadline, which was April 30th (the last day contracts could be signed). The million dollar question that everyone has been pondering is, how long will it take to recover from the huge increase in sales generated by the credit? I think without a doubt we are experiencing a “hangover”, with pending sales and showing activity way below normal for the first 2 weeks of May compared to years past.

 Here is what happened, and what I think we can expect over the next few months: 

Pending sales in April were 1143 units, the highest Pending month we have had since June of 2005, when we had 1158 Pending sales. Pending sales in March were 909 units, again way over what I would have expected as ‘normal”…without the tax credit, I’m guessing around 700 units in March, and about 800 units in April would have been normal, based on historical trends. The total impact for those 2 months was an increase in Pending sales of about 500 units over what I would expect to be a normal 2 month period. As of today, we are over half way through May, and Pending sales are at 227 units, which if we finish around 500, that number would be a record low number of Pendings for May, going back at least 9 years (we don’t have detailed stats prior to that). I would expect between 800 and 900 Pendings per month for May, June and July without the credit, so the 500 unit bubble created by the credit should be absorbed over the next 3 months, based on where we are right now with May Pendings. Based on my personal experience, I feel like the major impact of the credit was that it “pulled forward” demand, as opposed to really creating sales that wouldn’t have otherwise occurred, and I think our preliminary May numbers support that idea. I simply didn’t talk to very many people over the past year who were in the market as a direct result of the credits.

While it’s frustrating at the moment to be enduring a period of very few showings and sales, I am optimistic that we will absorb the bubble and be back to normal by the end of the summer. In the meantime, please feel free to let me know if you have more questions. I’m hoping my crystal ball is giving us an accurate picture!

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The Tax Credit Deadline has Passed…Now What??
May 11, 2010
By Judy Craft

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.”

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Tax Time!
March 30, 2010
By Judy Giannasio

April is tax time. How is your biggest asset doing?  Those Bluegrass homes are a great tax deduction. Home expenses can be deducted on the Form 1040 (long form) and itemized on Schedule A.  Also the mortgage on your Bluegrass Home is deductible – real estate taxes, qualifying interest and premiums. Check with your tax accountant to get up to date information.  Also repairs and improvements that add value may qualify for a tax deduction. Be sure to keep receipts!  Energy efficient upgrades such as Energy Star windows, water heaters and HVAC may also qualify.  A good site to check is www.energystar.gov to see if your projects qualify.

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Homebuilders Launch New Advertising Campaign!
February 4, 2010
By Becky Locknane
New Construction Kentucky houses

Save Thousands with New Construction

The Home Builders Association of Kentucky, in conjunction with Home Builders Association of Lexington, Homebuilders Association of Louisville and the Homebuilders Association of Northern Kentucky have launched a new advertising campaign to promote the new and extended tax credits. The Campaign is titled, “Buy Now, Buy New!”  The campaign includes television commercials, yard signs and website information to make buyers aware of the many tax credits and low interest rates available to them when they buy a newly constructed home.  The Sales and Marketing Council of the Homebuilders Association of Lexington held a membership meeting Feb. 2nd to explain all the tax credits, Federal Tax credits, Kentucky State tax credits, and Energy credits to Builders and Realtors. The speakers included Energy Star representatives, Mortgage Loan Officers,  a New Construction Realtor and the Association Executive Director. Walden Mortgage’s own Jeff Sharp explained how easy it is to apply for the Mortgage Credit Certificate (M.C.C.). You could save up to $2,000 a year in tax credits for the next 10 years! It is important to understand the all the tax credits and to be able to intelligently explain them our clients that are buying Kentucky houses, whether they are Lexington Homes or Louisville houses or any newly constructed Bluegrass home.  See what tax credits you qualify for.

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John Griffin’s Nicholasville, KY Sundries
February 1, 2010
By John Griffin

Here’s a few sundries about what has gone on in Nicholasville, KY this past week that maybe of interest…

Denger's Hearth and Home

A short seminar at Denger’s Hearth and Home (located behind Kohl’s just off US 27 in Jessamine County) was held on January, 27th. Milestone agents (some of which are Ball Homes Specialists) were gathered so we could be brought up to date on what is new in the world of fireplaces, and trends of the expanded offerings that Ball Homes will be providing for thier potential buyers, not only for Nicholasville homes, but everywhere that Ball Homes is building Kentucky homes.

New Sam's Club in Nicholasville, KY

For all you that are Sam’s Club fans, the new Sam’s Club is coming along and is located to the left of Kohl’s in the same area. The projected completion date should be by early summer.

Nicholasville, KY Winter

The snow storm  that was predicted all week finally arrived overnight on Friday with @ 4-5 inches.  A big kudos to the state and local road departments for all their efforts in getting the streets cleared of the snow. It seemed to slow everyone down some but it did not paralyze the area like I have seen it in years past. Even though temperatures remain cold, as far as the real estate market goes things seem to be heating up! Homes buyers and home sellers seem to be wanting mpre information on what is available now and also what the tax credits mean to them. I predict a busy early spring market as one will need to be under contract by April 30th deadline in order to take advantage of the tax credits being offered.  See what tax credits you are quailfied for! Although, if you are thinking of building a Ball Home, you must be under contract (including contingencies) by February 28th if you would like to take advantage of the tax credits. This is so that the builder will have time to complete the home by the June 30th closing deadline.

In Keene Crossing there is just one lot left now. The other seven lots have already started or finished construction on them. All of these homes will all be Energy Star rated homes. For those who are considering buying or selling a home this spring don’t wait, don’t delay, get started and pursue your new Bluegrass home today!

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My take on the First-Time Home Buyer’s Tax Credit
December 15, 2009
By Judy Craft

For those who say the Federal Tax Credit didn’t help housing sales, I say the proof is in the pudding. According to recently released statistical information from the Lexington-Bluegrass Association of Realtors the number of closed sales jumped 50% in the month over month comparison of November 2008/November 2009. Milestone Realty Consultants exceeded the local market by posting a 54% increase in dollar amount for the same time period with an 87% increase in number of units sold for Bluegrass homes. This points directly to the first-time homebuyer market as a pivotal source of sales.

LBAR - Sales '08 vs '09

LBAR - Sales '08 vs '09

LBAR - Inventory '08 vs '09

LBAR - Inventory '08 vs '09

With the recent extension and expansion of the Federal Tax Credit , 2010 promises to continue the trend upward as first-time homebuyer’s as well as move-up buyers scurry to take advantage of the generous Tax Credit coupled with historically low interest rates.

To view the full statistics, visit the Lexington-Bluegrass Association of Realtors statistic’s page.