Real Estate Mini-Boom Boosts Home Sales
Record low interest rates combined with tax credits have created a flood of activity
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Real estate experts say a mini-boom is taking place in the housing market as buyers race to take advantage of the first-time home owner tax credit before it expires in November. The National Association of Realtors reported home sales climbed 9.4% in September, the highest level in more than two years.
Record low interest rates combined with the tax credit have created a flood of activity. Inventory of unsold homes fell about 7%, the lowest level since March 2007. Nationwide sales are up nearly 24% from a year ago. Sales were especially strong in Los Angeles, San Diego and Las Vegas, growing as much as 13% from just a month ago.
But it's not all good news. The jobless rate is expected to climb even higher next year and experts warn it may cause more foreclosures as people struggle to maintain their mortgage.
"There's more supply that's going to come into the marketplace," Stan Humphries, chief economist at real estate Web site Zillow.com, told the LA Times. "That additional supply will outpace demand."
Those concerns are prompting Congress to consider extending the first-time buyer credit. Senators Johnny Isakson, R-Ga., and Christopher Dodd, D-Conn., want to extend it through June 30, and expand it to include all home buyers, at an estimated cost of $16.7 billion, according to the Times.
Many consumers are still cautious about making expensive long term commitments. Without incentives like the tax credit, experts fear the economy will stay stagnant.
Lawrence Yun, the Realtors' chief economist, told the Times, "We are not there in terms of removing the consumer fear factor."
