Chance Gates' Blog

RISMEDIA, April 23, 2010—Buyers responding to the home buyer tax credit and favorable affordability conditions boosted existing-home sales in March 2010, marking the beginning of an expected spring surge, according to the National Association of Realtors.

Existing-home sales, which are completed transactions that include single-family, townhomes, condominiums and co-ops, rose 6.8% to a seasonally adjusted annual rate of 5.35 million units in March from 5.01 million in February, and are 16.1% above the 4.61 million-unit level in March 2009.

Lawrence Yun, NAR chief economist, said it is encouraging to see a broad home sales recovery in nearly every part of the country, with two important underlying trends. “Sales have been above year-ago levels for nine straight months, and inventory has trended down from year-ago levels for 20 months running,” he said. “The home buyer tax credit has been a resounding success as these underlying trends point to a broad stabilization in home prices. This is preserving perhaps $1 trillion in largely middle class housing wealth that may have been wiped out without the housing stimulus measure.”

Total housing inventory at the end of March rose 1.5% to 3.58 million existing homes available for sale, which represents an 8.0-month supply at the current sales pace, down from an 8.5-month supply in February. Raw unsold inventory is 1.8% below a year ago, and is 21.7% below the record of 4.58 million in July 2008.

“Foreclosures have been feeding into the inventory pipeline at a fairly steady pace and are being absorbed manageably,” Yun said. “In fact, foreclosures are selling quickly, especially in the lower price ranges that are attractive to first-time home buyers.”

A parallel NAR practitioner survey shows first-time buyers purchased 44% of homes in March, up from 42% in February. Investors accounted for 19% of transactions in March, unchanged from February; the remaining sales were to repeat buyers. All-cash sales remain elevated at 27% in March, the same as in February.

The national median existing-home price for all housing types was $170,700 in March, up 0.4% from March 2009. Distressed homes, typically sold at a 15% discount, accounted for 35% of sales last month – unchanged from February.

“With home values stabilizing, a revival in home buying confidence will likely help the housing market get back on its feet even as the tax credit impact disappears,” Yun said.

NAR President Vicki Cox Golder, owner of Vicki L. Cox & Associates in Tucson, Ariz., said buying conditions are in near-perfect alignment. “Even with tougher loan standards, historically low mortgage interest rates with affordable prices and a sense that the market is turning have created optimal conditions in much of the country,” she said.

“With the fast approaching April 30 deadline to get a contract in place for the tax credit, Realtors are working harder than ever to negotiate transactions, arrange services and complete paperwork,” Golder said. “Because many repeat buyers need to sell their current home first, many will be purchasing later without the tax credit but now have the benefit of a more buoyant housing market.”

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage dipped to 4.97% in March from 4.99% in February; the rate was 5.00% in March 2009.

Single-family home sales rose 7.3% to a seasonally adjusted annual rate of 4.68 million in March from a level of 4.36 million in February, and are 13.3% above the 4.13 million level a year ago. The median existing single-family home price was $170,700 in March, up 0.6% from March 2009.

Single-family median prices rose in 14 out of 20 metropolitan statistical areas reported in March in comparison with a year earlier. Five metro areas experienced double-digit increases, including San Diego, St. Louis and Boston.

Existing condominium and co-op sales increased 3.1% to a seasonally adjusted annual rate of 670,000 in March from 650,000 in February, and are 39.3% higher than the 481,000-unit level in March 2009. The median existing condo price was $170,600 in March, which is 0.7% below a year ago.

Northeast
Regionally, existing-home sales in the Northeast increased 6.0% to an annual level of 890,000 in March and are 25.4% higher than a year ago. The median price in the Northeast was $249,800, up 8.9% from March 2009.

Midwest
Existing-home sales in the Midwest rose 7.2% in March to a pace of 1.19 million and are 15.5% above March 2009. The median price in the Midwest was $139,300, up 0.2% from a year ago.

South
In the South, existing-home sales increased 7.1% to an annual level of 1.97 million in March and are 13.9% higher than a year ago. The median price in the South was $154,800, up 5.2% from March 2009.

West
Existing-home sales in the West rose 6.6% to an annual rate of 1.30 million in March and are 14.0% above March 2009. The median price in the West was $209,400, down 7.9% from a year ago.

For more information, visit www.realtor.org.

As a Reno/Sparks real estate professional, I encourage all questions or comments on the Reno/Sparks real estate market or any of the articles posted.  I can be reached by email at  chance at ballard-company.com or http://www.myspace.com/chancegates

Current homeowners buying a house between Nov. 7, 2009, and April 30 and who have used the home being sold or vacated as a principal residence for five consecutive years within the last eight can qualify for the $6,500. It seems less is known about the repeat buyer credit. This incentive was added when the original $8,000 tax credit for qualified first-time buyers, which expired Nov. 30, was extended.

Houses purchased for $800,000 or less are eligible for repeat buyers. Single buyers with incomes up to $125,000 and married couples up to $225,000 may receive the maximum tax credit for both repeat and first-time purchases. The credit decreases for buyers who earn between $125,000 and $145,000 for single buyers and between $225,000 and $245,000 for home buyers filing jointly. The amount of the tax credit decreases as his/her income approaches the maximum limit. Buyers earning more than the maximum are not eligible for the credit. If a binding written contract to purchase is in effect April 30, the purchaser will have until July 1, 2010 to close.

The 2009 credit for first-timers helped jump-start the sagging home market in the summer and fall, data show. Walt Molony, a National Association of Realtors (NAR) spokesman, said two million existing-home sales in 2009 could be attributed to the $8,000 first-time buyer credit. Although it is too early to measure the credit’s effect on sales so far this year, Molony said NAR chief economist Lawrence Yun believes it will add 1.5 million sales to the tally.

The repeat-buyer credit was added to appease builders, who said the original did not offer enough time to purchasers of new houses, which take at least six months to build, to close on them. New homes accounted for only 7% of the tax-credit-based sales, Molony said.

The National Association of Homebuilders’ Donna Reichle said, “We hear builders saying they are getting inquiries, but that’s all so far. According to our economists, it’s way too early,” Reichle said. “If you look back at the passage of the original $8,000 credit and impact on housing starts, it took a couple of months, and that was in the spring as well.”

Moody’s Economy.com chief economist Mark Zandi says the credit will boost sales “modestly,” however, by 300,000, with one-third trade-up buyers. “I don’t expect the credit to be extended again,” Zandi said. “Each time it is extended, it becomes less effective and thus more costly.”

David Krieger, senior vice president and general manager of Coldwell Banker Preferred in Philadelphia, says he believes that “a very large increase in our listing inventory in January is a result of the $6,500 credit.” Still, the $8,000 first-time credit remains the chief reason his company’s home sales were 33% higher last month than in January 2009, he said.

Typically, repeat buyers are better off financially than first-timers, so a lot of repeat buyers realize from the start they don’t qualify for the credit, Weichert Realtors agent Alec Schwartz said. “What they do realize, and what is getting more sellers to list, is that they understand that there are plenty of first-time buyers who qualify for the $8,000 credit out there, and they have a much better chance of selling their house and buying a new one than before,” said Schwartz, Liv Mansfield’s agent.

This is also true in the region’s new-home market, said Wayne Norris, regional sales manager for Hanley Wood Market Intelligence. “Builders have experienced increased activity in recent months” attributable to the $6,500 credit and “the fact that many potential buyers were able to sell their houses” to those taking advantage of the first-time buyer credit,” he said. The sense of urgency to make the tax-credit deadline and fears of rising interest rates will push new-home sales higher in the spring, Norris said.

(c) 2010, The Philadelphia Inquirer.

In the Reno/Sparks real estate market, I’m finding most of the  houses being sold for less than $200,000  are getting multiple  offers submitted on the property.

As a Reno/Sparks real estate professional, I encourage all questions or comments on the Reno/Sparks real estate market or any of the articles posted.  I can be reached by email at  chance at ballard-company.com or http://www.myspace.com/chancegates