The Spring homes market usually picks up as winter goes out, some say like a lamb.  But there are already stirrings in this year’s Spring market.  I’ve even had a couple of multiple offer situations recently.  What has finally awakened the beast of deferred home buyer demand? 

• Rates: The Fed. has been buying mortgage-backed securities to keep interest rates low.  That’s an incentive to buy now.  That program ends on March 31, 2010.  Mortgage rates will go up, and that will first spur late deciders to decide, then chill the market when monthly payments get too high.  
• Prices: Home prices haven’t been this low in 7 years!  Most analysts agree our local homes market has reached bottom.  Demand is stronger but the inventory of available homes remains high so there’s lots of choices.
• Cash: OK, low prices, low rates, lots of choices, and there’s one more incentive, which expires on April 30:  A refund of up to $8,000.  (If you don’t owe that much, the IRS cuts you a check.)  You must be under contract by April 30th to qualify.

The graph below compares the homes inventory index for the past five Januarys. 

While still high, the inventory is where it was two years ago, and it goes down each Spring.  The worst period for home sellers, when sales stalled during the financial crisis of mid-September through April 2009, is behind us.  The second half of 2009 was even better than the last half of 2006 or 2007 .

The same information in a diferent format better shows the absorption of inventory over the past five years in Hunterdon County.  While the index now is where it was in 2008, above 2006 or 2007, the basket of incentives listed above should rapidly increase sales, causing the index to drop far faster, more like 2006 and 2007 than 2008 when the economy was in recession.     

Going forward, the economy could still have a few wild cards.  Last year’s bank bailout to stave off depression obviously worked.  (Today, Bankers seem to be the only ones not depressed.)  But the subsequent economic stimulus may not have been big enough to get the jobs machine back online.  That clouds the real estate market.  But overwise, we’re looking forward to a pretty robust Spring market – one that comes on like a lion’s pride looking for red meat.

Call me for a survey of recent home sales in your town, and analysis of your home’s current market value, please call me, Don Sherblom at 908 797-9900 or by email.