The first-time homebuyer tax credit did what it was supposed to do in the Midwest — stabilize, and then energize, the residential real estate market, a national analyst said Thursday
As the economy perks up in the second half of 2010, home sales should remain solid, said Lawrence Yun, chief economist and senior vice president for research at the National Association of Realtors.
Yun presented his 2010 residential real estate forecast Wednesday afternoon at the Sheraton Overland Park. He briefed The Eagle before his presentation.
His presentation was titled, "How will you do in 2010?" The answer, Yun said, is "probably pretty well."
He forecasts 5.7 million national home sales in 2010, up 500,000 from last year, and a 4 percent growth in home price.
"The key message is to... anticipate better conditions after four years of a very tough housing recession," Yun said.
But brokers and agents will have to redouble their efforts to get clients into affordable housing, he said.
"To assure that mistakes are not made, Realtors should advise clients not to overstretch their budget," he said. "Home ownership builds wealth slowly over a long period of time and not from a quick, short-term boom."
The $8,000 first-time homebuyer tax credit, and the $6,500 earmarked for buyers in their homes for the past five years, should prop up the residential market until unemployment turns later this year, Yun said.
To date, 2 million people have utilized the credit nationwide, with an additional 2.4 million first-time and repeat buyers expected to use the credits by June.
"As home values show clear signs of stabilization in a few months, that will also begin to boost confidence about home buying," he said.
The buyer optimism is slicing available home supplies, Yun said — down from almost a year's worth nationwide in the summer of 2008 to almost five months today.
"The tax credit no doubt has had a huge impact in denting inventory and helping begin to stabilize prices," Yun said.
"Note that the tax credit dollar will carry a bigger weight in the Kansas City area and the Midwest because of (more) affordable home values."
John McKenzie, president of Wichita's Coldwell Banker Plaza Real Estate, said he shares Yun's optimism but thinks the Wichita market recovery could "take a little longer."
"Although, I hope I am wrong about Wichita," he said. "The employment picture is very contingent on how well the national economy responds to first-quarter economic news.
"Housing is rebounding in several markets, and consumer confidence is moving positively. People are looking for value and good deals.
"Cautious optimism is where I see our local economy."