In a time of ongoing economic uncertainty, one bright spot continuing into early 2010 has been a rebound in the Northern Colorado residential real estate market.
Home sales - especially those in the $250,000-and-under range - picked up noticeably in 2009 after the financial meltdown in late 2008. Contributing strongly to the uptick was an $8,000 federal tax credit for first-time homebuyers. Originally scheduled to run out in late 2009, it was extended and expanded by Congress because of its popularity with homebuyers and sellers.
The program now also offers a $6,500 tax credit to homeowners who have lived in their current home for at least five years who want to sell. To qualify, homebuyers must sign a purchase agreement by April 30.
"We saw about nine months of increasing pending home sales (in 2009)," said Sarah Bennett, president of the Fort Collins Area Board of Realtors. "I think the tax credit was just a huge incentive and impetus last year."
Bennett said expanding the federal tax credit should open up new avenues of growth in residential real estate. "The move-up buyers weren't vacating to allow new homebuyers into the market," she said. "I think it's going to be favorable. The (real estate) agents are hopeful and I think there's a cautious optimism out there."
Skyrocketing numbers of home foreclosures - especially in Weld County - over the last few years have put lots of incredible deals on the market for those lucky enough to have good credit and a stable income.
While losing a home to foreclosure is a tragedy for those affected, the shake-up in the housing market has had some positive effects, Bennett noted.
"Overall, the foreclosures have given people more opportunities to get into the market and forced sellers to make sure their homes are priced appropriately," she said.
Unfortunately, more foreclosures in Northern Colorado are expected in 2010, as additional job losses and poorly made loans intersect before the economy fully recovers.
Bennett said the real estate community has been trying to help homeowners avoid foreclosure through short sales, in which homes are sold for less than what's owed on the mortgage. But she said some lenders are making that difficult.
"Now we're saddled with delays in negotiating short sales," she said. "Lenders are letting (homes) go to foreclosure instead of short sale. It's very frustrating."
But Bennett notes that, in general, the outlook for getting a home loan seems to be brighter. "Right now it's pretty much by the book," she said. "I've heard of people who should be able to get financing who can't get financing. But I think recently there's been a little more room to maneuver."
Another hopeful indicator for 2010 home sales is a continuing near-record-low mortgage rate. The average 30-year fixed mortgage rate started the year at 5.26 percent. Bennett said she expects that to rise during the first half of 2010 and perhaps hit 6 percent by June.
"We'll have to wait and see," she said. "But 6 percent is still a historically low rate."
Mortgage rates started the year with a dip that broke a streak of five weekly increases through December. On the national level, both home prices and home sales were rising as 2009 ended. But pending sales slid in November, giving rise to speculation that, without federal tax credits propping it up, the residential market is still in a very fragile recovery mode as 2010 unfolds.