Many real estate markets are no longer experiencing precipitous drops in home value, but that doesn’t mean that we’re out of the woods yet. It’s very difficult to figure out what’s going on with the housing market as there are still a few things propping it up. The homebuyer’s $8,000 will continue to play a role until it expires, making any house market predictions difficult. In the short-run, demand is expected to intensify as homeowners seek to get in on the tax credit, however, once that ends, there is still the specter of a large inventory of foreclosed homes on the market.
Will Demand Plunge After The Credit?
That’s the big question. One thing that can offset that potential is the remarkably low mortgage rates and low housing prices in the market. It’s possible that housing sales will stall in some locations, after the credit expires, but as soon as the inventory of foreclosures is reduced, the law of supply and demand will make prices rise again. The availability of credit is also a part of the equation that can affect how and when housing markets rebound.
It All Depends On Where You Live
If you are in a severely depressed housing market, like California, which has a large inventory of foreclosures, you’ll wait a lot longer for a housing recovery than if you lived in Raleigh, NC. The market in Raleigh may be depressed, but with a large influx of people coming in for jobs, once this market rebounds, prices will climb quickly. The jobless rate can also predict where housing is going, as foreclosures will only stop when more people are employed. Only people with jobs and good credit can apply for mortgages these days, so it’s a prerequisite to a better housing market anywhere. However, if you’re in a place that is experiencing people moving out, you can bet that housing market will stall and have difficulty recovering as the demand for housing will drop.