Local Real Estate Market Outlook for 2010

Ok, no crystal balls, no magic hats, and no talking to spirit beings here. Just market observations and educated guesses for the Spartanburg county real estate market for 2010. It seems everyone is wondering where the real estate market will go in 2010. I’ve read rosy reports from main stream news to pessimistic sell everything now and leave the county perspectives. While nobody knows for sure the direction, we can at least be clear about what forces are most influencing our local market and predict trends for the short term.

Driver #1, the Tax Credit
During much of 2009 home showings lagged 2008 for the first 3 quarters of the year. Then, boosted by the First Time Home Buyer Tax Credit home showings spiked beyond 2008 making the total year showings measure about equal to each other. The original deadline for the tax credit was in November ’09 and then congress extended the credit until late April 2010. Make no mistake this is having a big impact on home sales. Additionally, congress extended the 10% tax credit to include home owners who lived in their home for 5 consecutive years over the last 8 years. I’ve talked to many buyers in this category as well.

Driver #2, Interest Rates

There has been much debate among experts as to the direction of interest rates.  While almost all agree they will go up in the long term the uncertainty lies in WHEN they will go up.  This “expert” predicts interest rates to go up in June 2010.  If we assume this is the case then the monthly cost to borrow money to buy a home will go up.  For example, a $150,000 home at 5.0% interest for 30 years in $805 a month.  The same home at 7% will cost $997.95 per month, a difference of almost $200/month.  (does not include tax 7 insurance) This will result in a few things: 1) force many buyers to purchase lower priced homes, Read more..