The federal tax credit extension, coupled with an uptick in seasonal
buying, helped keep the real estate market on its tracks in the first
two quarters of 2010, according to RE/MAX of New England. Single-family
home sales across New England showed the affects of the tax credit
extension, as first-time buyers inked deals to beat the spring deadline.
As predicted, the second half of 2010 did not fare as well despite
mortgage interest rates hitting historic lows – at times dipping into
the 3% range. "The stalled third and fourth quarters have everything to
do with lower consumer confidence due to our struggling job market,”
said Jay Hummer, Executive Vice President and Regional Director of
RE/MAX of New England. "We’ve seen a nationwide trend of companies
accumulating cash and reducing debt by not hiring additional personnel.”
According to a report from Moody’s Investors Service, an estimated $943
billion has been accumulated as cash reserves by U.S. non-financial
corporations, primarily in the technology sector.
In an effort to stimulate the economy, the Federal Reserve recently
announced a second purchase of $600 billion in long-term Treasury bonds;
an attempt to speed up economic growth by further lowering long-term
interest rates. "With rates continuing on a steady trajectory, it’s
really an investor’s market,” said Hummer. "There is no other industry
right now in which you can expect 80% return on your investment.
Consumers who are able to put 20% down, rent a property and in 20-30
years time own it, will realize that return.” Read the report »
Len Lochrie
