Anticipating the Market

Economic indicators, and signs of the real estate market in particular, are everywhere. All you need to do is look closely and then extrapolate on what you see.

Are people spending money and, if so, on what? (Consumer staples, luxury products, travel, etc.) Where are they spending? (Home Depot, Marshalls, Tiffany, etc.) What about business spending? (Infrastructure, employees, office equipment, etc.) Where are interest rates? What interest rates are being discussed? Are we going into a period of inflation, deflation or stagflation? Which political party has the momentum and on what platform?

Today's focus: new home construction and government subsidies as they relate to you as a prospective seller.

Many of the national home builders are gearing up for a flurry of activity in the next few months. In fact, even after being caught with excessive inventory at the end of the last real estate boom in 2007, these companies are starting to build spec houses again in anticipation of an early spring market. (Source: WSJ page B1, 2/10/10)

The rush, of course, is predicated on the need for buyers to have a signed contract in place as of April 30, 2010, in order to take advantage of the tax credit. Now let's extrapolate.

If these developers - who follow real estatet market trends and are experts on market cycles - are confident enough in the tax credit's effect to start building without buyers in place, shouldn't you, as a seller, take this into account? After all, many of the large developers teetered on the verge of bankruptcy as the bubble burst and have been extremely cautious since.

What I take from the above is that developers are both excited about the early spring market and concerned by the dearth of activity that will likely follow the expiration of the tax credit. (By the way, I see no indication that the credit will be extended.) With that said, if you need to sell a property any time soon, strongly consider following the lead of the professionals. Do your best to have your property on the market in time to take advantage of the credit. The lower the price point of the property you are trying to sell, the greater effect the credit will likely have.

As always, feel free to contact me any time via e-mail (john@jw-realestate.com) or cell phone (978-423-9309) with any questions regarding your real estate needs.