Thursday, October 29, 2009

First Time Homeowner Credit Stirs Milford Real Estate Market

The Obama administration introduced many capital injections into our economy. From "Cash For Clunkers, Unemployment Extensions, Banker Bailouts, and the First Time Home Buyer Credits."

The "Home Buyer Credit" gives $8,000.00 to first time home buyers who have decided to purchase a modest home. Realtors have been pushing otherwise unwilling buyers to get into that first house and quit renting. The $8,000.00 credit has been a great selling tool and we have seen "ups and downs" in the property transfers here in town.

The property transfers seem to have either less than ten properties sold or in some cases 20-30. Their seems to be very little consistency in the numbers from week to week.

This is especially true on the lower priced homes that have become more affordable thanks to the homeowner credit. This program, although a great program for a new buyer has had a significant effect. This effect has resulted in artificially skewing real estate numbers in Milford and putting our Real Estate marked into an uncertain future.

If anyone looked at the stats they will see that smaller energy efficient homes have retained their value much better than larger three and four bedroom homes that have actually declined significantly in value.

A local realtor I spoke with said that the "First time home buyer credit" has been a stellar program and has helped sell many homes that otherwise may have not been sold. She fears that when the program ends and without additional incentives or improvement in the overall economy home sales may return to being sluggish.

This is an assertion that is, some what contradicted by a Yale New Haven professor who said this months increase was good news, and that the uptick in markets is better news. However, we should not go and celebrate a rebirth in the Real estate market just yet because the economy is still on shaky ground. He believes that we may be entering a new bubble and confidence may be the answer not the First time Home Owner tax credit.

Robert Schiller was formerly a quantitative forecaster of the real estate market indexes and he said that the monumental shift in the index to the upside has caused him to put his expertise aside. Shiller states the numbers are beyond what he was taught as a forecaster and until we see solid momentum we may be looking at the beginning of another bubble.

While we all instinctively know things in the Real Estate market are different, those out there looking to develop property for profit, or relocate to a new house should consider their actions much more carefully. The Real Estate Market will continue to be volatile, and since for many buying a house is likely to be the largest financial transaction in a persons life, the extra due diligence could not hurt.

(Photo of quantitative forecaster Robert Shiller of Yale University)

Link on this page goes to video

Schiff Adds His Thoughts On Real Estate

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