Joe Moshe, Broker/Owner, Charles Rutenberg Realty, says the increase in existing home sales during the month of December shows that the housing market is rebounding after hitting bottom and expects the trend to continue into the beginning of 2011 as the new tax law goes into effect.
The National Association of REALTORS recently reported that existing home sales in December jumped 12.3% from the previous month. The NAR reported a seasonally adjusted rate of 5.28 million units in December, compared to the upwardly revised figure of 4.70 million units in November. However, the December 2010 figures are 2.9% below the December 2009 figure of 5.44 million units. (Existing-home sales are completed transactions that include single-family homes, townhouses, condominiums and co-ops.)
According to the NAR, the national median existing-home price was $168,800, down from $170,600 the previous month. Distressed homes - which are sold at discounts of 10-15% relative to traditional homes - accounted for 36% of market share, which is up from 33% in November and 32% in December 2009. Meanwhile, the national average commitment rate for a 30-year fixed-rate mortgage in December was 4.71%, up from 4.30% in November, according to Freddie Mac.
"The decline in home prices could be attributed to homebuyers purchasing distressed properties who might not have otherwise afforded a higher-priced home," Mr. Moshe said. "The increase in existing home sales has caused a reduction in available inventory, but has sparked a rise in activity for mortgage lenders. With more mortgage applications being filed, we should see a rise in interest rates, which were at record lows in previous months. This shows that the housing market, after finally hitting a bottom, is slowly showing an upward trend."
Beginning in 2011, the new tax law that extends the tax cuts from the previous presidential administration goes into effect. One of the provisions of the bill allows homeowners to keep the deductions on their mortgage insurance premiums, saving them an estimated $300-$350 a year. In addition, the tax law calls for a reduction in the payroll tax, from 6% to 4% for 2011.
News of the tax cuts inspired confidence in the economy as consumers opened up their wallets during the month of December. The Commerce Department reported that holiday spending was up 5.5% compared to last holiday season. It was the best holiday season for retailers in five years.
"This renewed consumer confidence means people are putting more money back into the economy and are willing to make significant purchases," Mr. Moshe said. "This will also spill over into the housing market, which is still struggling to reach the same levels it did when the federal tax credits were available or before the housing bubble burst. The housing market will recover, but it will be a slow recovery."
Charles Rutenberg Realty is one of the nation's fastest-growing Agencies with more than 1,200 Agents on Long Island, Queens and Westchester. For more information, call (516) 575-7500, or visit www.crrli.com.
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About Charles Rutenberg Realty
Founded in 2006, Charles Rutenberg Realty of New York is one of the nation's fastest-growing, most progressive Real Estate Agencies with over 1,200 Agents on Long Island, Queens and Westchester. Charles Rutenberg Realty specializes in residential properties in Nassau, Suffolk, Queens, Kings and Westchester Counties. Among the 1,900 independent Real Estate offices represented by Multiple Listing Services (MLS), Charles Rutenberg Realty has the highest market share for available inventory, listings taken for the first six months of the year and listings under contract. Its Agents are trained in the latest creative marketing programs and can fulfill all their clients' financial and personal needs when buying or selling a home. Charles Rutenberg Realty is headquartered in Plainview, New York, with offices in New York City, Florida and Illinois. For more information, call (516) 575-7500 or visit www.crrli.com.