2010 prediction for Tacoma's housing market

Housing Stimulus:

The American Recovery and Reinvestment Act, which included an $8,000, non-repayable tax credit, was signed into law on Feb. 17^th . We saw an immediate uptick in home sales in the more affordable markets throughout the state and nation.

It also helped bring down inventory levels in the more affordable price ranges and  started stabilizing home values. High cost markets  benefited from FHA loan limit increase and opened up more affordable down payment options to the mid and upper price ranges. In the weeks following the passage of the tax credit, interest rates fell below 5% and refinancing applications nearly doubled. All of these events marked the end of real estate’s five months of pain that started when consumer confidence dropped substantially in September 2008.

Increased Affordability:

As the year went on, interest rates stayed low, prices began stabilizing, and sales continued to rise. One of the biggest perks ended up being affordability levels.  In some markets, we saw up to 25% more purchasing power thanks in part to historically low interest rates which were the result of the Treasury buying mortgage backed securities. Also helping affordability were adjusted lower home prices, the tax credit, and higher FHA loan limits. Each of these items led to increased affordability, and as a result, home sales have steadily improved.  

Tax Credit Extension:

As we transitioned into fall, the expiration of the tax credit was on everyone’s minds. Real estate professionals everywhere reported a frenzy of first-time buyers trying to close on homes before the tax credit ended. As a result, most markets experienced a large surge of sales in September/October. Meanwhile, the U.S. Government thankfully recognized that extending the tax credit was critical to continued economic recovery. On November 6, The updated Federal Tax Credit was signed into law,  which not only saw the extension of the existing $8,000 tax credit for first time buyers, but also a new $6,500 tax credit for eligible repeat buyers through April 30, 2010.

Running Start into 2010:

Thanks to historically low interest rates (below 5%!), adjusted home prices, and the passage of the extended/expanded tax credit, we are getting a running start on the New Year. The more affordably priced markets experienced recovery in 2009, which kick started the chain reaction of sales into the mid price points  helping move us through the economic downfalls of 2007/2008 and leading us into a more balanced, stable 2010. 

Source: Cheryl O'Brien, 2009 president of the Tacoma/Pierce County Realtors Association