If nothing else changed, and ONLY the tax credit was removed, there would be downturn in demand. But, realistically, the dynamics of the market are always in flux and points mentioned, such as mortgages not being purchased, FHA guideline changes, interest rate changes are all conditions that will impact us.
Those are the national issues, but each local market has conditions which offset or augment the direction and influence of the larger picture. From the reports I read and hear, Austin seems to in a more favorable position than other locations.
According to the Austin Chamber of Commerce there are still 1000 people a week moving into Austin. That is what is keeping prices solid during a down economy, IMHO. Prices follow the law of supply and demand, plain and simple.
Betina Foreman - Realtor
Keller Williams Realty
So, you should feel free to make offers now, just look for recent comps and tax values. Then make your guess about future events and offer a price. If you are bearish, low ball, if you are bullish, offer the asking price.
I'm personally bearish for anything over 450k. Very bearish.
One other thing I believe will happen in 2010: I believe that owners will realize that the downturn has changed the way we're going to live for a long time. Many of those owners will move up, or move down, in 2010 and settle back into the life they want. This is America. People will make sacrifices when they need to, in the short term. But, eventually, if their lifestyle is too far above their means, they will make moves to get back the lifestyle they want.
Obviously, I wish we had a crystal ball on the situation, but based on how I saw sellers and buyers in Texas behaving in 2009, I feel very confident with giving my opinion in this public setting. I hope you found it helpful.
A strong high-tech job market and first home buyers taking advantage of the government tax credit boosted the Austin market. The state capitol city may be the most stable housing market in the state as a result of its more diversified economy and has only seen a slight drop in housing values. The market is forecast to see slightly higher home prices by the end of 2010, averaging 3.1% appreciation.
Speaking on a more nationwide basis.
Many people have been using the $8k as a down payment (thanks for the "gift" uncle, pay you back when I get the check)
The federal reserve is going to stop buying mortgage backed securities in march. That should increase mortgage interest rates by 1/2 to 2% Some think a lot higher than that.
Unemployment. How is it is your area? The more unemployment the fewer people buying houses.
Foreclosures, are there many expected in your area? There are tons in the process now. When released they could drop prices greatly.
Tighter credit standards. Fewer people are able to get loans. That should lead to lower prices.
(Again nationwide) When free money $8k goes away and interest rates rise i expect to see people drop out of the buying market.
When interest rates rise from 5% to 6% or 7% you lose 11.9% and 23.9% buying power respectively.
What happens to the buyer who could buy a $200k house 2 months ago but now that interest rates are at 7% can only afford a $152k house? Does he buy the $200k house? I think not. Either the buyer decides not to buy as everything just went out of his price range OR prices drop.
Is the price prediction site above correct? Maybe, they say most places will drop in price, just not your area.
Am I correct that prices should drop nationwide? Time will tell. I can only see the factors in play. The final result logically follows my scenario above. Sometimes, things do not go as expected, sometimes they do.