The Data
Taken at face value, the numbers are not encouraging. State wide, year to date unit sales are down by 6.4% compared to 2009 and by 13.8% compared to 2008. Unit sales for November were 29% below 2009.
The statistics for Tippecanoe County resemble the report for the state, but are a little more encouraging. Year to date unit sales are 4.8% below 2009 and November was 21% below November of 2009.
What the Date Means?
Taken at face value, the numbers are not encouraging. However, when you dig a little deeper, they are not surprising or as troublesome! The powerful Federal income tax credit program to motivate first time home buyers launched in early 2009 was originally scheduled to expire on November 30, 2009. The program was extended in mid-November to June 30, 2010. However, by the time the extension was announced, the Realtor community had cued up a long line of closings in the last two weeks of November in order to meet the deadline. So, the weeks and months leading up to the first expiration date were very good real estate months in the midst of a real estate recession.
Now that the federal home buyer tax credit has fully expired (6/30/10), we are experiencing a traditional market without the favorable enhancements of a very successful federal stimulus program. In July, August and September, the transition was very difficult. The summer months were uncharacteristically slow. There is no doubt that the extended June 30, 2010 expiration of the tax credit accelerated a large handful of summer buyers (and perhaps 2011 buyers) into the first half of the 2010.
When the year closes, I anticipate we will see a year that consists of three distinct pieces. Portions of the first half of the year were characterized by strong sales activity and periodically multiple offers on a property. The third quarter was very slow, measured by buyer activity (showings, open house activity and written offers). The fourth quarter is rebounding. Are we emerging from the recession, it is hard to say? What I can state with confidence is we are clearly emerging from the post tax credit slumber in the third quarter.
Reasons for optimism!
We are seeing a lot of positive signs in the current market place and on the horizon. First of all, we continue to enjoy fine interest rates. The recent slight movement upwards has proven to be a reminder that these rates will not last for ever and serious buyers need to take action. Second, the buyers we are working with are more serious. Our relationship between showing activity and offers written has improved. I don't think there are as many "lookers" in the market as earlier. That being said, many of our buyers are "looking for a deal" and sellers are not of an equal temperament. Our negotiations are often long and tiring. However, for the reasonable and persistent, many great opportunities are coming together. Finally, the quality of the homes on the market is strong. We have fewer homes listed by "sellers" who are testing the market.
All of these factors cause us to have strong optimism as we prepare to celebrate the holidays and enter 2011 with a full tank of gas.
