Taking a pulse of the market

“Call for Action” in December by Realtors let Congress know that certain changes made by legislators could end up, far from helping, actually adversely affecting the housing market and the overall economy.

Households having a short sale, a foreclosure or a loan modification resulting in mortgage debt forgiveness will not have to pay taxes on that amount. Also maintained was the mortgage insurance premium deduction.

Taxpayers with incomes less than $110,000 who pay mortgage insurance can deduct their premiums on their 2012 and 2013 tax returns.

Energy efficiency tax credits remain in effect and homeowners who make energy efficiency upgrades to an existing home are eligible for a 10% tax credit through 2013. These are also retroactive to include 2012.

Relative to commercial properties, qualified improvements may take 15-year depreciation for another year and made retroactive to cover 2012.

Despite the U.S. population growth of approximately 1% per year, the number of owner households has been steady at 75 million since 2007 while the number of renter households has increased from 35 million in 2007 to 40 million in 2012. A look into those numbers show that what’s preventing renters from purchasing a home are the tight credit requirements.

New home construction has been well below the 50-year average of 1.5 million. Housing starts are below historical averages, even with new construction expected to increase from 776,000 units last year to more that 1.1 million this year. Inventories are down, putting upward pressure on prices.

Delinquent mortgages and homes in foreclosure have declined since hitting a peak of 4.3 million units in the fourth quarter of 2009. In the first quarter of 2012, the number of foreclosures was 3.1. million. Foreclosures were about one-third of the market in 2010 as compared to being one-quarter of the market last year.

The National Association of Realtors is forecasting a 3% growth rate in the U.S. gross domestic product by 2014 coupled with an increase in the national median home price ($177,000 to $193,000). After years of so-so performance, both existing home sales are forecasted are expected to increase. New-home sales are expected to increase from 368,000 to 650,000 by 2014, housing starts from 776,000 to 1,300,000 by 2014. Distressed sales are expected to decrease as a percentage of sales from 25% to 8% by 2014.

The Greenwich real estate market is not only one of the last markets to react to economic down turns but is also a market that is somewhat slower to recover when the economy improves. This explains why prices have not increased as they have in other areas. While Greenwich’s inventory is low, the market is still active and there is pent-up demand.

 

Mary Ann Clark is a Realtor with Coldwell Banker at 177 West Putnam Avenue in Greenwich. Questions or comments may be e-mailed to [email protected] or she may be reached directly at 203-249-2244.

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