NATIONALLY PRICES PLUNGE WHILE SALES ARE UP!
Nationally, home sales rose in 2009 for the first time in four years, despite a 17% December slump that resulted from the anticipated termination of the $8,000 first-time homebuyer tax rebate, as well as the typical holiday slowdown. Despite a moderate increase in the number of homes sold, home prices plunged more than 12 percent in 2009 - the sharpest fall since the Great Depression.
This is in sharp contrast to the Denver Metro area, where the number of sales decreased over 12%, but prices stayed steady with a median sales price of $219,000 - only a $900 decline from 2008. Nationally, housing statistics were just the opposite, with the number of sales up 4.9%, accompanied by a large price drop that brought the median sales price down to $173,500. Just more evidence that Colorado tends to remain counter-cyclical to the rest of the nation when it comes to real estate activity.
Despite the increase in the number of sales, there are still concerns that home sales will weaken once again in March when the Federal Reserve ends its program to buy mortgage securities, which tends to keep interest rates artificially low. The next shoe to drop will be the elimination of the first-time homebuyer tax credit, which is scheduled to end April 30, 2010.
However, some analysts expect the Federal Reserve to extend the program and continue buying mortgage securities, to shore up the housing industry. But depending on the mood of the public with regard to the federal deficit rising at unprecedented levels, more government spending may be hard to swallow. Some trends show that the national housing market will begin to recover. But with the economy still in turmoil, unemployment at double digits, and foreclosures still on the rise, the national housing market is still seen as very fragile. Another good reason to take advantage of Denver's counter-cyclical trends and buy now while rates are still around 5.25% and before prices start to increase.