Record snows may still clog driveways and carpet lawns with ice but the spring real estate market is kicking off across the country earlier than normal as buyers push to make the April 30 tax credit deadline.
It’s worth $8,000 to first-time buyers and $6,500 to existing owners to get a contract on a new home within the next 42 days. With rates around five percent, plentiful inventories of homes for sale, record selections of discounted distress sale properties and prices at their lowest levels in nearly a decade, more and more buyers are deciding the time has come to act.
Some observers are concerned the pool of first-time buyers is largely depleted. Others say that the tax credit for existing buyers is not an adequate incentive. However, initial reports around nation over the February Presidents’ holiday-traditionally the first weekend in the annual spring real estate market-suggest that the tax credits are inciting an early start to the buying season.
Realty offices from Rochester, New York to Ventura, California report unusually large numbers of calls from prospective buyers, searches of online listings and applications to get pre-qualified for financing.
In Rochester, activity began with the new year, five weeks early.
“I was shocked to see how many leads are coming in for this time of year,” said Karen Leonardi, vice president of corporate and consumer affairs at Nothangle Realtors. “These are definitely numbers we typically would see in the spring, not in January.”
Much of the buying activity is in the $85,000 to $150,000 range. The competition for homes in that price range in good condition is fierce because first-time homebuyers are out in force.
Record snows last week in eastern Pennsylvania put a temporary halt to home shopping, but the market is still ahead of last year. Lehigh Valley homes are selling quicker to start the year, increasing more than 22 percent from year-ago levels. Local experts say the big picture points to gradual progress from the depressed levels of 2009.
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.
In Boston, prime well-priced properties are receiving multiple offers. One buyer lost out two weekends in a row, bidding $20,000 over asking price for a house in Framingham.
“If you are a buyer, you have to be very decisive, you can’t hesitate,” said she told the Boston Globe. “You are looking at very low inventory and very steep competition.”
Properties below $600,000 are hardest to find in the Boston market, and the most desirable of those, in good condition and reasonably priced, are generating multiple bids within days of going on the market, real estate agents and buyers say.
Massachusetts did not overbuild during the housing boom. While sales have been on the increase since July, the number of single-family homes on the market fell to 21,743 in December, marking 21 consecutive months of inventory decline compared with the same month a year before, according to the Massachusetts Association of Realtors. December’s figure was a nine-year low for the month.
At the higher end of the market, selection remains more plentiful. More expensive properties can linger for months.
In Irvine, Calif., the spring market traditionally kicks off after Super Bowl weekend. Sellers who took their homes off the market in winter are considering listing them again. Buyers are getting serious.
Irvine’s problem isn’t lack of demand. It’s lack of inventory.
“Demand has totally run rampant for months now,” said Steven Thomas of Altera Real Estate told the Orange County Register. “But the real problem has really been a lack of inventory. There just are not enough homes coming on the market.”
Thomas says that demand, or the number of pending sales, hasn’t looked this strong since 2005. Demand increased by 28 percent over the past two weeks, which means more homes are in escrow and under contract, according to Thomas’ report
Seattle is seeing extraordinary demand, too, according to the Estately Web site.
“2010 will start slow-January sales will be off because we saw soft traffic in November/December. Spring and summer of 2010 will be different! Every year, there is an annual increase in people searching for real estate from December to January. But this year we are seeing a much bigger bump - 80 percent bigger. This year we are seeing 40 percent more people searching for homes on Estately in January than we were in December.
It’s no wonder the National Association of Home Builders’ housing market index rose two points in February after falling for two consecutive months, a sign that low interest rates and federal tax credits are boosting demand for new homes.
“Builders are slightly more optimistic that the housing recovery is finally beginning to take root,” said Bob Jones, the builder’s group chairman.