June has been a busy month in the local real estate market --- or at least on my end --- as a LOT of buyers close on their purchases of homes in and around Harrisonburg.  Quite a few of these buyers are first time buyers, who will receive an $8,000 tax credit when they file their taxes early next year. 

But the opportunity for this $8,000 tax credit has passed now --- the deadline to have a house under contract was April 30th, and the closing deadline is June 30th (though it may be extended).  So....what now?

The big question that remains is whether this was either:

• bringing buyers into the market who wouldn't have otherwise bought
• bringing buyers into the market earlier than they would have bought

If either, or both, of those were occurring, then slower times could be ahead. 

I've had this conversation with many people lately --- now that this whole tax credit has come and gone, can the real estate market stand on its own?  Will things slow back down again? 

The big picture is this -- fewer and fewer homes have been selling for quite a few years now:

• Only 1,438 homes in 2006 (a 14% decline from 2005)
• Only 1,248 homes in 2007 (a 13% decline from 2006)
• Only 936 homes in 2008 (a 25% decline from 2007)
• Only 816 homes in 2009 (a 13% decline from 2008)

But this year looks different!  Year to date 2010 versus year to date 2009 shows an impressive 10% increase!  That's a 23% swing in momentum, given the 13% decline from 2008 to 2009.  Certainly, home sales in the first part of 2010 could have been falsely inflated because of the tax credit --- but will the bottom really fall out of the market so much that we see another 10% - 15% decline in home sales when considering all of 2010?

I have made lots of predictions about the real estate market over the past five years, and most of them have been wrong.  I did not think we would continue to see the number of home sales fall as much as they have. 

In 2008, I thought for sure we'd see 2007 volume.  In 2009, I thought for sure we'd see 2008 volume.  So.....here I go again:

I predict that we will see 800 home sales in 2010.  That would show only a 2% decline since 2009 --- and would be a turn in right direction from the multiple years of double digit declines in sales volume.

But, as the image above alludes to, there is somewhat of an awkward pause now, as we see what the second half of 2010 has to hold.  I am thankful that the tax credit brought buyers into the market --- it helped to sell properties for many homeowners that really needed (or really wanted) to sell.  I am now hopeful as we move forward, that our local real estate market will continue to recover and strengthen through the balance of 2010.