Bi-Monthly Market Analysis

Posted 05/01/2010 by Rob Schmaus

King/Snohomish counties- After an obvious rebound from early 2009 the question that all of my clients are asking… Have we hit the bottom? The answer to this question, in this agent’s opinion, is a big fat NO.

This is why:

-Inflated sales from First Time Home Buyer Credit
-Inflated sales from Gov. subsidize interest rates
-Coming changes in Condo lending
-Unemployment
-Banks Coming Release of winter foreclosures

Inflated sales

The Facts:
The original First Time Home Buyer Credit (FTHB) offered by the US Government expired Nov 30th, 2009. A relatively small but healthy number of people rushed to claim the credit and the sales number have been increasing over the summer of 2009. All of this during a period where interest rates are as low as they have been for 30 years (LA Times)

Rob says:
WE HAVE NOT YET HIT BOTTOM. Clear as day. When the government’s new extended credit expires in May (and doesn’t get extended again) the ‘on-the-fence buyers’ go away and the late summer 2010 months will crumple. After may we will begin to start seeing the effects of higher interest rates on the sales numbers. I anticipate rates closer to 6.75-7%, the days of 5% are over for a while.

Coming changes in Condo lending

Beginning almost immediately, loans are going to be much more difficult to get. The reason for this is FHA and VA loans will be taking a harder look at the buildings they are potentially investing in. The new rules could have the affect of rendering many small, older buildings un-loan-able. I disagree with this Realty Times article’s headline that these changes could “amp” condo sales, because they won’t. However, the article does break-down the changes well.

Unemployment

In Washington state the unemployment rate is 9.5%, nationwide it is over 10%. People with jobs mean more people spending money and paying taxes. Controlling unemployment is key to an economic turnaround.

Banks Coming Release of winter foreclosures

The rumor for months has been that many large banks have been holding back foreclosure notices over the holidays but now that 2010 has begun we’re going to get a flood of new foreclosure listings. This rumor is now beginning to morph more into a slower ticker that and massive flood but the fact remains that foreclosures are not at thing of the past. The Seattle PI agrees trouble may be ahead…