April 29, 2010

5 Great Reasons Why You Should Get Excited About the Real Estate Market in 2010 and Beyond

I know . . . I know.  The last few years in the real estate market have been tough.  Foreclosures.  Short sales.  Homes underwater.  Surplus inventory.  Credit crunch.  You name it.  Realtors, lenders, builders, and title companies have all felt the pinch.  The economy is tight and things aren't right.  It's enough to make you want to upchuck!  But before you lose your lunch . . . hear me out.  Analysts say there is good news on the horizon and it's coming to a neighborhood near you.  So hold on to your hat, here are 5 great reasons why you should get excited about the real estate market in 2010 and beyond:

1. The Recession Is Over . . . Maybe
Analysts believe we are either at the tail-end, or have already pulled out, of the recession.  By all accounts, the U.S. economy is improving.  Jobless claims are down.  Home sales are up.  Home prices are up.  Consumer confidence is up.  Consumer spending is up.  GDP is up.  Exports are up.  Corporate profits are up.  All of that is good news because it means money is flowing.  When money flows the economy grows.  Consumer spending accounts for 70% of economic activity, so spending is critical. 

2. The Homebuyer Tax Credit
More than 1 million households have utilized the homebuyer tax credit and many more are expected to use it.  The expanded and extended credit applies to first-time homebuyers as well as long-time homeowners.  Some of the highlights are: 

• Sales contracts must be entered into on or before April 30, 2010 and the closing must occur on or before June 30, 2010.
• Existing homeowners who have lived in the same principal residence for any five-year period consecutively during the eight-year period that ended on the date the home is purchased will qualify as long as settlement occurred after November 6, 2009. The maximum credit is $6,500.
• The maximum credit for first-time homebuyers is $8,000. The full credit is available for homes costing $80,000 or more.
• Income limits have been raised. Taxpayers with modified adjusted gross incomes up to $125,000, or $225,000 for joint filers, qualify.

 3. The Housing Market Is Strengthening
Existing-home sales are up. The increase is attributable, in part, to government assistance programs, loan modification programs, low interest rates, and to the expansion and extension of the homebuyer tax credit. Nonetheless real estate analysts project that home prices in many markets will experience less deflation and other areas will stabilize or appreciate. Additionally, interest rates are expected to remain historically low through the first half of 2010.

 4. The Unemployment Rate Is Stabilizing
General consensus is that jobs are the key to economic recovery. Although we have not yet seen real job growth, the unemployment rate is stabilizing and is expected to fall. This is, at least, a light at the end of the tunnel. Further, the unemployment rate in Maryland should remain below the national average. Governor Martin O'Malley has made job creation a priority. In fact, he outlined an economic agenda that includes three key initiatives: Maryland Small Business Credit Recovery Program, the Unemployment Trust Fund, and the Job Creation and Recovery Tax Credit. The Job Creation and Recovery Tax Credit would give small businesses a tax credit of $3,000 for every unemployed worker hired. That's a great incentive.

5.The BRAC Impact
The federal base realignment and closure program, also known as BRAC is expected to have a  positive economic impact on the region. Residents and businesses will benefit. The BRAC program began in 2005 and must be completed by September 2011. BRAC is expected to bring up to 60,000 new jobs to Maryland in the next 5-7 years (22,000 at Fort Meade). What many do not know is that the Fort Meade expansion includes not only BRAC, but also the National Security Agency (NSA), Extended Use Lease (EUL), and additional Department of Defense growth. All of this expansion will jump-start job and housing growth.

Are you excited yet? Well, you should be because all economic barometers seem to indicate things are looking up. True, it will be more of a slow recuperation than a speedy recovery. But slow growth is better than no growth. So keep your chin up.  And get excited because in 2010 and beyond you will have a lot to look forward to.

Posted by: Shana@lakeviewtitle.com