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November 18th, 2009 9:19 AM by David W. Welch
Reuters reported that housing starts fell over 10% in October compared to the rate being built in September. At least a part of that was caused by a huge drop in multi-family. These types of project are up and down, and with commercial real estate on its heels right now it does not surprise me that these projects are so volatile right now. The single family side of the equation has to be evaluated in the context of everything that is going on. The first time home buyer tax credit was quickly approaching expiration, and I believe earlier in October there was sentiment that it might not be extended. Although talk of extending the credit has been around since July and August, what seemed like a sure thing ran into some challenges. First, the deficit for last fiscal year came in at a whopping $1.4 trillion. Second, there was not a lot of evidence that the tax credit was creating a turnaround as much as helping to stabilize the housing market. Third, news broke in October, I believe, that there were 100,000 suspected fraud cases related to the existing credit.
I believe that this growing sentiment that the credit might be extended guided some buyers toward resales. Even when it became apparent the credit would be extended and expanded there were rumors out there that if you contracted before December 1st, you would not qualify for the new credit. This type of misinformation, could have also had the effect of buyers putting off decisions to contract for a new home if they were hoping to take advantage of the new tax credit provisions. Maybe I am completely off base with my analysis of this situation, but here in Orlando we saw tremendous sales in October with more than 2,200 sales closed last month and nearly 4,000 contracts (not offers, contracts) written in Ocotober. I believe that was the most contract written so far this year. I continue to say if banks will start making decisions on short sales, REO's and getting loans closed we will get through this faster and healthier. Orlando continues to post around 9,000 pending sales, while our active inventory remains around 16,000.
Orlando Real Estate, David Welch Real Estate Optimist, As Seen on HGTV's House Hunters