Archive for Thursday, August 26, 2010

Home sales rebound in Lawrence, thanks to federal tax credit

Patrick Nieder of Lawrence frames a home in the 5600 block of Silverstone Thursday in west Lawrence. Area home sales in July were down 38 percent compared with July 2009.

Patrick Nieder of Lawrence frames a home in the 5600 block of Silverstone Thursday in west Lawrence. Area home sales in July were down 38 percent compared with July 2009.

August 26, 2010

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New reports show there were signs of a rebound in the Lawrence housing market during the first half of 2010.

Now, questions turn to whether the bounce will continue in the second half of the year following the expiration of a federal program to stimulate home purchases.

A new report from the Lawrence Board of Realtors shows Douglas County home sales were up 12 percent from the first half of 2009. A report out of Lawrence City Hall also shows single-family home construction increased by 37 percent.

But already there are signs of a downturn following the June 30 expiration of a federal program that gave tax credits to many homebuyers. Sales in July were down 38 percent compared to July 2009.

That drop was expected, said Steve LaRue, president of the Lawrence Board of Realtors. But he expects buyer activity to pick up again by October as consumers become cautiously more optimistic.

“I feel encouraged going forward,” LaRue said. “We have some foundation under the market where I don’t believe we’ll be sinking anymore.”

Here’s a look at the specific numbers:

• 856 home sales were recorded for the first half of the year, up from 763 during the same period of 2009.

• Sales of newly built homes had the largest percentage increase of any category, rising by 39 percent. A total of 74 new homes were sold, up from 53.

• Average selling prices for newly built homes, though, declined by 15 percent. The average price was $232,647, down from $275,208 a year ago. LaRue said builders have adjusted to the market and no longer are building $350,000 to $400,000 homes, unless they are custom-ordered homes.

• The average selling price for all homes — both newly built and existing — increased by 1.5 percent for the first half. The average price was recorded at $182,070 versus $179,339 a year earlier.

• Builders started 80 new single-family homes in Lawrence during the first half of the year. That’s up from 58 during the first half of 2009. But the numbers are still well below Lawrence’s historical rate of home construction, when builders routinely constructed more than 300 single family homes per year.

Comments

Steve Jacob 4 years, 8 months ago

The theory is no one is in a rush to buy now because interest rates have been so low for awhile. Once they start going up, people will hurry and buy before it's too late.

Richard Payton 4 years, 8 months ago

Double dip recession that has been forcast by some will cause home ownership to slide. No money, No credit, No down payment, No job = No home for many Americians. Most polls show that most think America's headed the wrong direction. The wealthy have walked away from second homes putting a drain on the taxpayer. Obama is Change Still Coming?

gr 4 years, 8 months ago

Tax credit?

But this wasn't a tax credit, was it? Wasn't it a loan? One that had to be paid back? The idea of encouraging people to buy now what they can't afford and maybe something will change in the future which got us into this mess to start with?

average 4 years, 8 months ago

It was a zero-percent 10-year loan for houses bought in 2008. But, it was a refundable tax credit (i.e., cash) for houses bought in 2009 and the first few months of 2010. Supposedly, you have to pay back the credit if you don't live in the new place for three years, but the enforcement of that seems unlikely.

gr 4 years, 8 months ago

Well that's no fair. How about equal treatment of those buying in 2008 with 2009. Or about about those who didn't get anything in 2007.

Life's not fair! We want equality! We demand equal rights!

(sorry, trailing off...)

imastinker 4 years, 8 months ago

It is irritating. I bought a house during the time of the tax credit and wasn't eligible because I only owned it for 4.5 years, not the required five.

KU_cynic 4 years, 8 months ago

Dead cat bounce?

2009 was so bad that things could only get better. I wouldn't read much of a trend into these figures. Long-term growth will depend on demographic and income improvements. Who's making more money in Lawrence these days? What the source of new population growth and new jobs?

Looks to me like a flat housing market for several years is quite likely. Prepare for it, property-tax-supported government entities.

avoice 4 years, 8 months ago

They have been for two years now, at least the contractors have. Realtors are probably trying to go into other sales fields.

avoice 4 years, 8 months ago

The tax credit itself created a short-term demand in the market that was inevitably going to be followed by a short-term sales trough. It's the same psychological principle as a sale. When an item is on sale, lots of people buy it because it's such a good deal. When the sale is over, most people who wanted the item have one and that decreases demand significantly. Additionally, many people who may have wanted one now will not buy one because, having missed the sale, they are loath to pay a higher price than those who got in on the sale. This psychological phenomenon will keep people from wading into the housing market for a few more months, probably until spring. If the economy doesn't significantly sour between now and then, home sales will probably begin to pick up then.

average 4 years, 8 months ago

Nope. 'Refundable' credit meant that you got $8,000 extra back (or 10% of purchase, if you bought a house under $80k like in the rest of KS), even if your taxes owed was $100.

The 2009-10 homebuyer's credit was refundable like that. The current energy tax credits are not refundables (ie, if you don't have enough taxes for your credits to balance out, your tax bill is zero, but no extra refund comes to you).

notajayhawk 4 years, 8 months ago

And in other news, "the Obama administration's flagship mortgage-relief program" for people to restructure their mortgages and stay in their homes, was a dismal failure, too, with half the people who applied dropping out. Only about a third actually got permanent modifications and are making their payments on time. (That one only cost us $75 billion.)

Oh, and foreclosures are still higher than ever (about ten times normal) and still growing (expected to be 50% higher next year). Part of that growth will be due to people taking advantage of the first-time-buyer's credit and then finding out they really couldn't afford a mortgage.

The administration really helped the housing market, didn't they?

Steve Jacob 4 years, 8 months ago

I agree with it being a failure. Mortgage relief does no good if you don't have a job.

imastinker 4 years, 8 months ago

It also didn't do anything to help the problem. I have a house that I bought five years ago and can't sell because it's worth quite a bit less than what I owe. I rented it out at a loss, but can't even refinance it because nobody will refinance without me making a lump sum payment to get to 80% LTV.

Lots of people are losing their houses because of similar situations - and his relief program doesn't address this situation. If I could refinance at today's interest rates the situation would be fine.

Clevercowgirl 4 years, 8 months ago

Here's a big factor not yet mentioned. The banks would rather invest money than make real estate loans. With interest rates so low, and default rates so high, banks are really leery of real estate loans. The borrowing guidlines are such that most real estate investors and builders can't qualify for loans. There is a new federal mandate aimed at tightening real estate lending practices. As stated above, foreclosures are at an all time high. This will continue to drive down the price of housing. These factors, along with job insecurity mean that the people who can afford their house payment will stay put for the most part. The real estate/construction market is dead in the water right now. Sorry to be so negative. Maybe we should support new businesses such a Lowe's. Oh wait, we would rather support walkability.

notajayhawk 4 years, 8 months ago

"There is a new federal mandate aimed at tightening real estate lending practices."

Instituted immediately after encouraging people to buy new homes with a tax credit. Brilliant, wasn't it?

Clevercowgirl 4 years, 8 months ago

Another thing, people used to house hop when we were in an appreciation cycle. There is no longer any money to be made by moving. Also, people are, thank goodness, becoming more aware of how much of their potential retirement savings goes to interest on a new loan.

Hoots 4 years, 8 months ago

And after the tax credit ran out the number took a dive off a huge cliff. People...when you see mortgages recorded in the paper it has to do with all of them regardless of a purchase or a refinance. In large part since the end of June what you are seeing are refinance. With rates lower than 4% the people who still can are refinancing like crazy. This story is so funny considering that respected economist expected the number of homes sold to drop by 14% over the last month or so and the actual number was almost 28%. This junky economy isn't done with us yet. Just wait for the second half numbers. This article is junk and two months behind the times. Anyone with a brain could figure out what was going to happen when the federal dollars dried up. A good piece to run in June but now it just makes you look stupid considering the data that has come out in the past week. Does your 20-something staff at the LJ World ever actually read and research real news or do they just play around on Facebook and text friends all day...Jeeeeez.......?

Clevercowgirl 4 years, 8 months ago

Another misleading article from the JW. Don't they know that busy people just skim the headlines?..... or maybe they do know that.

notajayhawk 4 years, 8 months ago

"Anyone with a brain could figure out what was going to happen when the federal dollars dried up."

Just as many of the 'newly created jobs' will disappear after the 'stimulus' money runs out.

Clevercowgirl 4 years, 8 months ago

So why not discuss this with an economist in your article. There are about100 people at KU alone qualified to discuss this.

LocalYocal 4 years, 8 months ago

You know, you people are just going to whine and complain no matter what the article says. Of course they are going to shout the good news about an increase in sales since there hasn't been good news since about 2006. It's nice to read something positive for a change. And another thing, if you people don't know the specifics about the tax credit, then don't just make stuff up. I actually feel dumber having read the majority of these comments.

Clevercowgirl 4 years, 8 months ago

I'm glad that you got to read something positive. Heck, why don't we fill the whole paper with slanted, poorly researched articles. Oh, wait a minute.....

kansasmutt 4 years, 8 months ago

Look for the numbers to drop off for another year. After that look for them to stay even at a down state for 2 to 3 years. If we are still around, things may get better.

Jimo 4 years, 8 months ago

What's sad is that we're years into this and we still do not even have discussion, let alone action, on reforming the entire residential housing system. Nothing stops financing companies from starting up again with questionable loans, limits the massive tax subsidies to only the lower middle class, or keeps government guaranteed underwriters from chasing irresponsible private companies for marketshare or beefs up law enforcement repression of mortgage fraud (which the WSJ reports is already picking up again).

Democrats are unwilling to break up Fannie Mae and Freddie Mac and Republicans are uninterested in anything short of laissez faire deregulation.

bad_dog 4 years, 8 months ago

Sheesh Autie. I don't know bout that cathedral ceiling analysis. Ain't he on the outside of the house? Or maybe them cuzzins like siding rather than drywall inside their rooms? Maybe it's cathedral ceilings under the soffit they prefer? My double-wide was built in the 70's so it don't got none of them modern features like toilets with 2 flusher buttons and such...

Clevercowgirl 4 years, 8 months ago

Why not retitle the article to read: "Real Estate Continues to Tank Locally".

BigPrune 4 years, 8 months ago

It can make it hard to refinance your house when its value has depreciated $60,000. Quite a hit and how many years will it take to recoup the loss, 10, 15, or 20 years?

Clevercowgirl 4 years, 8 months ago

Caption under picture "Patrick Nieder, one of the few working framers in Lawrence, works on a house in the 500 block......

volunteer 4 years, 8 months ago

My realtor cousin is now signed up to be a substitue teacher in several area school districts. She is not optimistic of making a living selling homes these days.

(and she repports the sub lists the schools have now are quite long...lots of folks hoping to be called in to substitute in this economy)

KansasKristin 4 years, 8 months ago

I don't think most real estate agents make much money. Seems like their are millions of them out there.

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