Every January I sit down and try to figure out what happened in the Real Estate market for the previous year. I like to think that this information helps me prepare for the coming year.

This year, rather than working with all of the homes that were sold, I decided to focus my research on a specific size and type of home. So what better choice than the “Typical Valley Home?” A 3-bedroom, 2-bath home with a 2-car garage is pretty typical for our area.

So I took sales information for of all the “Typical” homes sold for each calendar year from 2004 through 2009. I tallied the number sold each year and averaged the sales price, list price, the age of the home and how many days it took to sell.

The graph on the left shows how the market has changed from  2005  through 2009.  Seventy of these “typical” homes sold in 2005 at an average sales price of $203,827.  In 2007 ninety-five of these homes were sold. By then the average sales price had increased to $221,266.

Then in 2008 the number of sales dropped back to the 2005 level.  Interestingly, the price did not.  It increased to $222,245.  It kind of “overshot” the market.

In 2009 the number of sales didn’t change much but the price fell like a rock.  The financial crisis had a lot to do with the drop in price, but almost as many homes were sold in 2009 as in 2008.

The tax credit for first-time home buyers had a significant positive impact in the last part of 2009.  Local Realtors® that I spoke with attributed 10% to 30% of the last half of the year’s sales activity to the FTHB plan.

 We have a new home buyer incentive program for 2010.  It includes people that have previously owned homes as well as first-time buyers.  Income limitations have also been raised which should allow even more people to qualify.

It’s reasonable to think that the Federal tax credit program combined with some of the State’s energy incentive plans will get us off to a good 1st quarter this year.  I think it will, especially for the Typical 3-BR, 2-BA, 2-car garage home we’ve discussed here.

The big question is... what will happen when the Buyer incentives go away? Will the normal demand be enough to prevent prices from falling still more?

The current program is due to go away April 30th. Historically that’s about the time our market perks up.  We’ll see...

Questions? Comments?  Call or click we love to talk Real Estate!